Inflation and it's effect on house prices.

If inflation goes from 2.5% to 5.5% and interest rates go up 1.25%, there will be no impact as the market will judge the rate hikes insufficient and real interest rates (defined as nominal interest rates minus inflation) will go down.

Over the long term interest rates should relate to long run nominal GDP growth in the country, which is real GDP growth (the number typically quoted in the media) plus inflation. E.g. If long-term real GDP growth is 3% and long-term inflation is 2.5%, then nominal GDP growth is 5.5% (3% plus 2.5%). If interest rates (RBA Cash rate) are 1%, it makes sense to borrow money and invest in the economy since the economy (nominal GDP) is growing at 5.5%. If people keep doing that, debt builds up and the economy overheats.

So the RBA cash rate on average should be more like 5-6% and if interest rates have been too low for too long, then interest rates have to go higher than 5-6% to bring inflation back down again.

It is possible then that when the RBA does lift rates to 1.25%, the market goes 'so what!' and keeps steaming ahead.