13/08/2026
Everyone talks about interest rates when predicting where property prices are going.
But there’s another number that matters.
What does it actually cost to replace the house?
It’s an interesting one, particularly here in WA.
According to Australian Property Update, the cost of building a house nationally is around 51% higher than it was at the end of 2019.
In WA, construction costs have more than doubled.
That matters.
Higher interest rates reduce borrowing capacity. Buyers can borrow less, repayments are higher and that can absolutely put downward pressure on property prices.
But higher rates don’t make houses cheaper to build.
If established property prices fall far enough, eventually you get to a point where building new simply doesn’t stack up.
Developers pull back.
Builders build less.
New supply gets tighter.
And buyers who might have built new start looking at established homes instead.
That doesn’t mean property prices can’t fall. They can, and different areas will perform very differently.
But when we talk about how far prices could fall, we can’t just look at interest rates and borrowing capacity.
We also need to look at what it costs to actually put another house on the ground.
