Mat Tiller's Market Update

The Reserve Bank of Australia has lifted rates again as inflation re-accelerates, driven in part by higher fuel and energy costs flowing through the economy. Global conflict, cost of living pressures and a still resilient labour market have kept inflation risks elevated, and the RBA is clearly focused on staying ahead of that. 

From a property perspective, this reinforces the shift already underway.

Momentum is easing.

We are now seeing a more balanced market, particularly in Sydney and Melbourne where conditions have softened, while other capitals are still growing, just at a slower pace.

Buyers are still active, but they are more selective on price, more sensitive to borrowing capacity, and taking longer to make decisions. The urgency we saw over the past 12 to 18 months is easing. 

At the same time, listings are starting to lift. That is creating more choice and more opportunity for buyers, particularly those who are finance ready and have been waiting for conditions to normalise.

Rental markets remain very tight. Vacancy is low, rents continue to rise, and that is keeping investors engaged, even with higher funding costs. For tenants, conditions remain challenging, while for landlords the fundamentals are still supportive.

The bigger picture remains unchanged. 

We are still not building enough homes. Supply remains constrained, and population growth continues to drive underlying demand. That should continue to put a floor under prices, even as growth becomes more uneven across markets.
 
Looking ahead, attention will also turn to the upcoming Federal Budget. Any measures aimed at housing supply, affordability or investor settings will be critical in shaping the market into the future.

Mathew Tiller is the Head of Research, Economics & Business Intelligence for the LJ Hooker Group