The Australian population grows at about 1.3 per cent a year. Over a longer period of time, you would expect the population of experts that serve that population, in any industry, to grow at roughly the same rate. Of course, there will be periods when the population of experts grows more slowly, or declines, producing a shortage. In those periods, those who remain earn outsized returns and profits attracting new entrants. If an oversupply subsequently transpires, reducing average profits, experts leave for greener pastures elsewhere.

With that in mind, it may come as no surprise that while the Australian population is growing at about 1.3 per cent a year, the population of real-estate agents has been growing at more than 9 per cent per annum.

Clearly this is unsustainable. That the population of real-estate experts has grown so much faster than the underlying population it serves is telling. It suggests that outsized profits have been available recently in the property market. Rising property prices, combined with the consequent increase in supply, has provided enough profit to feed a growing population of agents. Everyone is happy.

But it might all be about to end.

One of the reasons for rising property prices, arguably the most important influence, has been declining interest rates. As global central banks flattened yield curves, by bringing longer-term rates lower through quantitative easing, cash became a liability because it was earning less than necessary to sustain life. Consequently, savers ceased saving and began ‘investing’ in everything from shares and bonds to art and low-digit licence plates, wine, farmland and even residential real estate. The latter occurred despite the fact that the yield has been pushed so low in Australia that no listed residential real estate investment trust could possibly exist.

Indeed, records have been smashed across all asset classes around the world, especially for assets that can never produce any income; witness the US$110.5 million ($145.75 million )paid for a Jean-Michel Basquiat painting – a record for a post-1980 painting and a record for an American artist. In Sydney, the NSW number plate ‘29’ was auctioned in May this year, with a $450,000-$550,000 pre-auction estimate. It was sold for a record $745,000. A week later, the NSW number plate ‘36’ was sold for $705,000.

In the context of global asset price rises like these, Sydney, Melbourne and Brisbane property is nothing special. And if declining interest rates promoted a boom in property prices, rising interest rates must end it, along with the abundance of fees for a population of real-estate agents.

Interest rates for borrowers are already rising and the financial stress on interest-only mortgagors is just beginning, as Table 1, showing ANZ interest rate changes announced on June 9, 2017, reveals.

ANZ lowered the interest rate on principle and interest (P&I) mortgages by 5 basis points but it raised rates on interest-only loans by 30 basis points. Keep in mind that the Reserve Bank has not raised rates, meaning ANZ’s move was out-of-cycle.

For property investors with an interest-only mortgage, switching to P&I will cause payments to rise by as much as 40 per cent.

Immediately after ANZ’s announcement, CBA subsidiary Bankwest doubled minimum deposits to 20 per cent, barred interest-only borrowers from some product offerings, reduced rates on some owner-occupier P&I loans by 31 basis points and raised rates on interest-only lending for investors and owner-occupiers by 34 basis points.

NAB announced that it had lowered loan-to-value ratios on interest-only housing loans to 80 per cent.

A shadow shopping survey of ANZ, CBA, NAB, Westpac, St George, Bankwest, Bendigo and Adelaide Bank, BOQ and Suncorp, conducted by Macquarie Bank executives posing as first home-buyers earning $105,000 and spending $2800 a month on general expenses and rent, found that the major banks were offering to lend 14 to 19 per cent less to owner-occupiers and 12 to 26 per cent less to investors than they were two years ago. In 2015, the banks were willing to lend $650,000 to $700,000. In 2017, the same banks were willing to lend only $550,000 to $600,000.