Unemployment rate drops to just 4.1pc

Jobs rebound hard

I noted on the Twitter that there could easily be a +50,000 rebound in headline employment in December after last month's surprise drop. 

In the event, we got +65,200, a big rebound to a new high of 14.68 million employed persons. 

Looking through the seasonal volatility and noise, the 3-month average employment growth was about +25,000 in Q4 2025, essentially in line with what we saw back in Q2. 

Over the year to December, employment increased by around +165,000, or a somewhat more sedate +1.1 per cent.

Interestingly, this is a far slower rate of growth than was seen in the aged 15+ civilian population, which reaccelerated as the year went on to +426,000 or +1.9 per cent. 

It's not difficult to see why housing supply targets are not being met, while rents and construction costs appear to have reaccelerated. 

However, the labour force participation rate is well down from the highs, down by -0.4pts from 67.1 per cent to 66.7 per cent over the year to December 2025. 

As such we got a huge drop in the seasonally adjusted monthly reported unemployment rate to just 4.1 per cent, down from 4.4 per cent in September and the lowest since May 2025. 

The seasonally adjusted underutilisation rate also dropped from 6.2 per cent to just 5.7 per cent.

Overall - even allowing for the wild volatility, this was a much stronger result than expected.

In fact, the median market forecast from economists was for an unemployment rate of 4.4 per cent! 

The 3-year bond yield jumped to above 4.2 per cent, and the Aussie dollar has continued its screaming run higher up to above 68.2 US cents. 

James Foster ran through the figures in more detail here. 

The wrap - what next?

This stronger than expected result puts a February interest rate hike squarely in the frame at about a 50:50 chance. 

The final call will be determined by the December quarter inflation figures. 

On the one hand, the monthly inflation figures pointed to some apparent downside risk for Q4 inflation (indeed, Westpac have now revised down their forecast to a benign 0.5 per cent for headline inflation, and 0.7 per cent for trimmed mean inflation). 

On the other hand, there are some signs that rents and construction costs have picked up again, while unprecedented crowds at the Ashes, the Australian Open, and some 40,000 punters at the first day's reopening of the Sydney fish markets (versus a 5,000 capacity) all seem to speak to an ebullient consumer. 

The key inflation figures will be released next week on Wednesday morning. 

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Dwelling starts rise a little further

Housing starts rise

More approved dwellings got underway in the September 2025 quarter, especially in Victoria.

The number of dwellings commenced nationally rose to a seasonally adjusted 48,800.

Yes, this is still way below the government's implied target of 60,000 per quarter, but starts are off the cycle lows of September 2023, and have been trending higher for two years, to the highest level in the 3½ years since March 2022 quarter.

Completions, on the other hand, remain very sluggish, with only 44,000 homes delivered by the private sector - a figure actually lower than a year earlier. 

High construction, labour, and material costs - combined with skills shortages - have been to blame for a surge in development company insolvencies. 

The number of dwellings under construction has thus continued to increase since the end of calendar year 2024, though it's a little hard to gauge whether any of these projects are stalled, delayed, or mothballed. 

The increase in units, apartments, and townhouses under construction has largely been driven by undersupplied south-east Queensland, particularly the Gold Coast. 

Overall, although housing supply is still slow, there are some more solid signs that for more than two years the number of dwelling starts has been trending higher, since the September 2023 nadir. 

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ausbiz TV: Fixed mortgage rates rising

ausbiz TV

I joined Juliette on ausbiz TV to talk about what's happening in the housing market early in 2026, including with lending.

Tune in here (or click on the image below):

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Podcast: Property in review for 2025, and the 2026 outlook?

Australian Property Podcast

Chris and I took a look at 2025 in review, and the property market outlook for 2026.

Here's the episode overview:

Episode overview

• 2025 – strong price growth in Perth and Brisbane, also Darwin boomed
• 2026 – forecasts. SQM’s Boom & Bust report for 2026
• Interest rates – no cuts priced in at all for 2026
• RBA expects inflation to be in the target band later in 2026
• Listings – will they stay tight?
• How to make a property plan for 2026

Tune in here (or click on the image below):

You can also watch the YouTube version here:

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Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

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My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

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Long-term arrivals at new highs

Arrivals power up

The number of permanent and long-term arrivals over the 12 months to November rose to 1.15 million, a new record high.

On a net basis, permanent and long-term movements increased to +476,960, having 'bottomed' out in January 2025.

There's a lot of spirited debate about what this does or doesn't mean for official net overseas migration figures, which will be lower than this when they're eventually reported. 

Even if the official numbers prove to be significantly lower than this, there's little doubt that population pressures are intense at the moment. 

Short-term arrivals also increased to 831,970 for the month, an increase of 19½ per cent from a year earlier. 

It was also reported this week that temporary visa holders are often remaining in Australia after their initial visas expire. 

Rental markets tend to respond to actual demand rather than to debates around visa categories, and as such rental prices have been reaccelerating since the middle of 2025, broadly mirroring the reported uptrend in the figures for net arrivals. 

---

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Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

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My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

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Rents are reaccelerating

Cotality Chart Pack

Cotality released its latest monthly housing Chart Pack, which showed the reacceleration in rents.

Rental price inflation over the 2025 calendar year picked up to +5.2 per cent, following on from the +4.8 per cent increase in 2024. 

Source: Cotality

High debt to income lending remained low and far below the newly-imposed 20 per cent speed limit. 

Source: Cotality

Stock levels remained low - total listings remained -20.6 per cent below average at the national level.

Source: Cotality

Home values rose +2.9 per cent in the December quarter, after lifting +2.3 per cent in the September quarter. 

The total value of the residential housing market lifted to an estimated $12.3 trillion in December. 

You can download the full Cotality Chart Pack here. 

---

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Listen in to our podcasts

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And our popular Low Rates High Returns Show also remains available on Spotify.

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4. Work with me privately

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Unemployment to rise as job vacancies ease

Job vacancies ease a bit further

Job vacancies fell only slightly over the 3 months to November 2025, according to the ABS.

Other private measures have tended to show a weaker trend.

Over the 12 months to November, job vacancies were -5.2 per cent lower (-17,800 fewer vacancies).

Western Australia is bucking the trend over recent quarters, with hiring now rising again out west.

There are now more than two unemployed persons per job vacancy, for the first time since February 2021.

The numbers are a bit softer than they look as the labour force expanded by a massive 250,000 over the year to November. 

As such, the job vacancies figures imply that the unemployment rate will likely rise further from here. 

Over the past quarter job vacancies in education were down -15.5 per cent, while over the year manufacturing vacancies fell by a third. 

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Listen in to our podcasts

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And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

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By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

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A small win for US inflation (Core CPI lowest since 2021)

US inflation eases

The BLS released the latest US inflation figures which came in at 2.7 per cent over the year for headline, and 2.6 per cent for all items less food and energy.

The figures are not complete due to the October figures not having been reported, so the figures may be treated with some caution. 

Source: BLS

The headline figure is still above the 2 per cent target, and housing-related inflation still showed signs of inflationary pressures in rising 3.2 per cent over the year. 

Still, the figures for core inflation were slightly better than expected, hinting that most of the tariff-related price rises may have passed through. 

Core inflation is now at the lowest level since 2021.

US Treasury yields were fairly flat, after initially seeing yields fall. 

Silver prices have resumed their extraordinary run this week, rising by a further 3 per cent tonight to a new high of $87.49 per ounce, with gold prices also at record highs. 

The recent surge in part may represent a threat of the erosion of Federal Reserve independence. 

---

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Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

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By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.