The two factors that could halt Aussie house price boom

PHOTO: High unemployment, low-interest rates and the rental market unpredictable – Is now the time to enter the Australian housing market? FILE

House prices are soaring at unprecedented levels, but a strange combination could soon see the Aussie house market go haywire.

This time last year there were fears from economists and the major banks that Aussie housing prices could crash, with predictions of up to 32 per cent price falls coming from even the most mainstream of forecasters.

Now 12 months later you’d be hard pressed to find any forecaster expecting lower housing prices in the short term, let alone a historic housing crash.

According to figures from housing price data provider CoreLogic, housing prices are currently rising at the fastest rate since 1988, a time when the average Aussie home could be purchased for around $100,000.

But as the global economy continues down the long path to recovery from the coronavirus pandemic, there is a threat on the horizon that grows more concerning for the Aussie housing market with each passing day, inflation or in some cases the expectation of future inflation.