RBA hikes; building approvals crunched

RBA hikes as expected

The Reserve Bank of Australia hiked interest rates by 25 basis points today as expected to a cash rate target of 3.85 per cent, with another hike next month looking very possible based on the updated SOMP forecasts. 

Summarily, growth and inflation forecasts were revised up, and unemployment forecasts were revised down. 

Much of the media commentary has focussed on government spending as one driver of inflation, with Australia apparently at risk of becoming a global outlier as a developed country with the potential for significantly rising interest rates. 

It's interesting to see how the dynamics have changed from last year, when interest rate cuts were being discussed.

Lately the Aussie dollar has surged to above 70 US cents, which may at least help to dampen inflation and slow the economy later in the year, alongside today's interest rate hike and more hawkish market expectations. 

Today's interest hike and the expectations for more to come will likely curb some of the investor activity in the housing market, but will also likely serve to constrain new housing supply a little over time.

Building approvals drop

In related news, the ABS released the building approvals for the month of December 2025, which fell back by -15 per cent to a seasonally adjusted 15,542, following last month's spike, with attached dwelling approvals plunging  back to earth by -30 per cent from November to just 5,842.

Taking a step back from the (inevitably noisy) monthly statistics, detached house approvals are picking up a bit of pace in Perth, but not anywhere else. 

Attached dwelling approvals obviously had a much weaker month in December, but in truth have generally been grinding higher over the past year in Greater Sydney, Brisbane, Perth, and Adelaide. 

Melbourne seems to have lost some of its private sector momentum for unit approvals, though there are potentially some large build-to-rent developments set for the pipeline for the Victorian capital. 

Overall, it was a considerably weaker set of numbers for December, which will do little for the short-term prospects of addressing the chronic undersupply of housing in many parts of the country. 

Over the 2025 calendar year, about 195,000 dwellings were approved, far short of the increased demand for housing, which has been driven by strong population growth. 

Finally, cumulatively dwelling approvals through FY2025 and FY2026 to date are running at less than 80 per cent of the government's implied housing target of 20,000 new homes per month. 

Quite apart from the total number of dwelling approvals, the actual delivery of new housing supply has been very slow at a trend of around only 42,000 to 43,000 dwellings per quarter. 

You can read more details on today's figures with James Foster here. 

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In other news, SQM Research released its latest figures for total property listings. 

As usual listings picked up towards the end of January, but remained lower over the year across every capital city, and -11 per cent lower than a year earlier nationally. 

Asking prices for units rose 1.3 per cent in January, to be 12.2 per cent higher over the year, in part driven by increased demand for the more affordable housing segments as the first homebuyer deposit guarantee ramps up. 

Total stock on the market remains tight, maintaining upwards pressure on housing prices early in 2026.

You can read SQM's media release here. 

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January home values tick higher

January prices update

Cotality released its home values update for the month of January 2026.

Capital city prices rose 0.7 per cent over the month, and regional prices rose 1 per cent. 

Over the year prices were up 9.2 per cent across the capital cities, with the strongest increases seen in Darwin, Perth, and Brisbane. 

Source: Cotality

Cotality reported that ultra-tight rental vacancy rates are nudging renters towards ownership, assisted by the first homebuyer deposit guarantee.

Rental vacancy rates remained below average at 1.7 per cent, with only Canberra seeing vacancies above the decade average.

Reported Cotality:

"With such low vacancy rates, Cotality’s national Rental Index was up 0.6% in January, the strongest monthly change in rents since April last year. 

Similarly, the annual pace of rental growth picked up, recorded at 5.4% over the 12 months to January, adding approximately $35.20/week to the median rent. 

The past five years has seen a 42.4% jump in weekly rents nationally, adding approximately $204/week to the median rent. 

For context, the previous five-year period (ending January 2021) saw rents rise by just 8.2%."

Source: Cotality

You can read the Cotality release here.

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Some volatility looks set for financial markets this week, with gold and silver erasing $10 trillion of market capitalisation over the past 72 hours.

Gold is trading back below $4,400 per ounce - for a pullback from the record highs of -21 per cent - and silver below $72 per ounce. 

For tomorrow, markets are pricing close to a 75 per cent chance of an interest rate hike to a cash rate target to 3.85 per cent. 

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

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with 4½ million hits here. 

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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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Michael Yardney’s property investment bible, 20 years on

Australian Property Podcast

Michael Yardney joined me on the podcast to discuss his best-selling property investment book 20 years on.

We discussed what has changed, and how to invest for the next 20 years.

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

You can also watch the video version on YouTube here:

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1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

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

Subscribe for my free daily blog with 4½ million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,000 followers. 

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.

Investor credit growth fastest since 2007

Metals crash to earth

It was a case of 'no crying at the casino' overnight as the gold price pulled back by -15 per cent and silver prices crashed back to earth with an extreme -38 per cent drop in a hectic 24 hours of trading.  

It's hard to convey just how extraordinary this level of volatility is for such huge asset classes, but the dollars per ounce daily moves for silver are far in excess of anything previously seen, with a parabolic move upwards paving the way for this record-breaking down day.

May you live in interesting times, as they say.

Investor credit growth accelerates

It was a much quieter close to the week in Australia, thankfully, with the Reserve Bank of Australia releasing its Financial Aggregates figures for the month of December 2025, allowing us to take stock of the calendar year just passed.

Housing credit growth strengthened into the end of the year, rising by a seasonally adjusted 0.69 per cent for the month of December, and with the annual growth rising from 6.6 per cent over the year to November to 6.9 per cent to finish the year.

Very solid. 

The growth has largely been driven by investors of late, with the  seasonally adjusted monthly credit growth of 0.96 per cent for investor credit the strongest monthly figure since 2007. 

This gives a hint as to why APRA pre-emptively jumped in with some soft macroprudential speed limits, though it may well prove to be the case that an increase in housing supply combined with a rate hike or two take cares of any potential risks in 2026, without the need for firmer intervention.

Over the year broad money growth was 7.2 per cent, while credit growth finished the year at a surprisingly strong 7.7 per cent, hinting at looser financial conditions than was previously thought. 

Business credit growth was solid all the way through the final months of the year, rising to 9.7 per cent for the year ended December 2025.

The M3 measure of the money supply in Australia has surged by 38.3 per cent over the past 5 years, reflecting why it's a time so many housing market participants want to hold debt and assets. 

Perhaps not coincidentally, advertised rents rose 43 per cent over the same period according to Cotality data. 

The housing credit impulse picked up from the middle of 2025 and accelerated into the end of the year.

Capital city housing prices rose 9.2 per cent over the year to January 2026, according to Cotality, with Perth and Brisbane leading the way with outsized price increases. 

On this evidence, it looks like there’s probably more to come in 2026. 

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1. Download our property buying guide

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You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

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

Subscribe for my free daily blog with 4½ million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,000 followers. 

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.

All that glitters...is gold

Gold exports windfall

The ABS released its latest export and import trade prices indexes, which showed moderate signs of import prices being a source of inflation.

Much of the inflation we do have seems to be more homegrown, as was seen in the consumer price inflation figures earlier in the weak. 

The import price index rose by 0.9 per cent over the December 2025 quarter, to be 3 per cent higher over the year to December.

However, the Aussie dollar has surged considerably higher over the past month to trade at above 70 US cents, which will in turn change the dynamics for imports in 2026. 

Export prices were modestly lower over the year, but jumped 3.2 per cent higher over the December quarter.

No prizes for guessing what drove the increase - the gold export price index comfortably now having doubled since 202 - with the gold price rising dramatically over the past year and turning almost vertical in recent weeks. 

Not much to add here that hasn't already been said on the gold price, except that the price action has been absolute extraordinary, with speculators piling in lately and the volatility at the highest level since the lockdowns era. 

There was an epic 'flash crash' tonight for precious metals tonight, before the uptrend quickly resumed apace. 

The gold price erased US$3 trillion in market cap in about 20 minutes, before rising again. 

---

1. Download our property buying guide

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Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

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

Subscribe for my free daily blog with 4½ million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,000 followers. 

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.

Inflation sets the scene for February rate hike

Inflation above target

The ABS released its headline inflation figures for December 2025, which came in at 3.8 per cent over the 12 months to December.

Trimmed mean inflation was 0.9 per cent over the final quarter of the calendar year, and picked up from 3.2 per cent to 3.3 per cent over the 12 months...which was above the Reserve Bank of Australia's earlier forecasts, and above the target 2 to 3 per cent range.

Source: ABS

Reported the ABS:

"The main reason for stronger annual Goods inflation in December was Electricity, which rose 21.5 per cent in the 12 months to December, compared to a rise of 19.7 per cent to November".

A problem with more expensive energy and power prices, as parts of Europe are finding out, is that they have the potential to impact almost every area of the economy, driving up manufacturing and industry costs, and in turn consumer prices.

Another factor through 2025 has been a likely re-acceleration in population growth, driving increases in rents (+3.9 per cent), and travel and accommodation prices (+9.6 per cent), as well as new dwelling prices and indeed housing costs more broadly, in the form of materials and labour prices. 

Private measures of rental prices have accelerated and increased more than this over the year, but the inflation measurement was artificially pushed a bit lower by the Commonwealth Rent Assistance. 

A high level of public spending, including for the NDIS, has helped to keep the unemployment rate very low at just 4.1 per cent, but also has driven wages and prices higher again. 

The strongest rate of annual inflation was seen in Brisbane at +5.2 per cent.

Rates to rise

It was a disappointing (if not that surprising) result for the Treasury, with Australia a bit of an outlier in this regard, but there's presumably little point in the hawkish Reserve Bank waiting for further confirmation of the increase in prices, and the cash rate target will almost certainly be increased at the February meeting from 3.60 per cent to 3.85 per cent.

Westpac sees this as a 'one and done' rate hiking cycle, with a cash rate target of 3.85 per cent expected to be restrictive, though realistically there is scope for another increase as the year progresses. 

Curiously the Aussie dollar and the 3-year government bond yield both dropped after the release, suggesting that markets had been positioning for a strong inflation print, and that perhaps the figures weren't quite as bad as they might have been. 

---

1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

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

Subscribe for my free daily blog with 4½ million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,000 followers. 

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.

Markets position for a hike or two

NAB Survey

The NAB Survey for December showed business conditions at a reading of +9, solid, but a bit below where we were back in October.

Business confidence remained soft at a reading +3.

Final prices remained relatively subdued, while the reading for retail prices was the lowest since 2020.

Source: NAB

Nothing too alarming there - however capacity utilisation only edged down slightly to a still-elevated 83.2 per cent, and labour shortages still appear to be an ongoing issue. 

After a hotter than expected inflation reading for New Zealand in the December quarter, in Australia markets have been repositioning for a likely hike at the next RBA Board meeting.

Market pricing shifts

Australia's 3-year bond yield has traded up to 4.28 per cent, while the dollar has screamed higher.

A year ago commentators were panicking that the dollar falling to below 62 US cents might import inflation - now the Aussie is trading at above 70 US cents (partly due to a weaker US dollar)! 

Whether or not there is a hike next month will depend on the December quarter inflation figures.

Inflation has become an issue again in Australia due to a combination of big government spending - in particular on the NDIS - high rates of population growth driving rents and housing costs higher, and ongoing increases in power bills. 

Westpac's revised down forecast of 0.7 per cent for trimmed mean inflation would see core inflation over the 12 months of around 3 per cent - probably enough to keep rates on hold - while the median market forecast of 0.8 per cent would likely result in a hike.

Looking through the noise, this cycle might incorporate a couple of interest rate hikes taking the cash rate target back up to 4.1 per cent.

Source: ASX

The inflation figures are due for release in the morning at 11.30am AEDT. 

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1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

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

Subscribe for my free daily blog with 4½ million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,000 followers. 

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.

Michael Yardney: How to Negotiate, influence, persuade

Property podcast

This week on the podcast I was joined by Michael Yardney who explained how to be a great negotiator.

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

You can also watch the YouTube version here:

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1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

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

Subscribe for my free daily blog with 4½ million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,000 followers. 

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.