Rental crisis deepens

Rental crush

SQM Research released its latest rental vacancy rate figures, with all capital cities now appearing to tighten again, with the possible exception of seasonal Darwin (mind you, even there the vacancy rate was a maniacally low 0.6 per cent in February). 

SQM reported that asking rents accelerated to rise by +6.6 per cent over the 12 months to February 2026.

Brisbane's rental vacancy rate is now falling again, down to just 0.8 per cent, according to SQM. 

Source: SQM Research

SQM's CEO Louis Christopher noted that rental demand is clearly outstripping supply, so expect the rental conditions to tighten further. 

Unfortunately, with economists tipping rate hikes in March and May, conditions for developers are now the worst they've been in nearly 20 years. 

You can read SQM Research's media release here. 

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Interest rates to rise again, and again...

Rates fuelled higher

After the Reserve Bank of Australia hiked interest rates in February, it had been assumed that there would be no further moves until May - after the next quarterly inflation figures have been released - especially given that there's been no time for the February tightening to take effect as yet.

Unless you've been living under a rock, however, you'd know that fuel prices have jumped following the onset of conflict in the Middle East.

Some of the servos have been beginning to resemble the gas station prices in the movie I am Legend...

Australia doesn't always help itself in this regard, running supplies below the internationally recommended levels, and already there have been reports of regional petrol stations experiencing devastating shortages.

Until yesterday, markets had been pricing for interest rates remaining on hold in March, but an interview with Deputy Governor Hauser changed all that, with several banks and economists now expecting interest rates to be hiked again in March and May, which would take the cash rate target back the cycle high of 4.35 per cent. 

There could yet be a further hike beyond that later in the year.

Source: ASX

This won't poll at all well for the government, who will be under pressure to find some spending cuts in the Federal Budget. 

Vacancy rates plumb the lows

One of the mechanisms through which higher interest rates are effective in cooling demand is through slowing the pace of housing construction:

Quoting Livewire Markets:

"Higher interest rates are a significant driver in slowing dwelling construction, as they increase borrowing costs for both developers and consumers, leading to reduced investment, fewer new home approvals, and increased project cancellations."

Unfortunately we're already in a chronic housing shortage before these interest rate hikes take effect, with rental vacancies falling back to near-record lows at a national vacancy rate of 1.1 per cent in February, according to SQM Research's data. 

Source: SQM Research

Vacancy rates are already at emergency low levels in Hobart (0.5 per cent), Darwin (0.6 per cent), Perth (0.6 per cent), and Adelaide (0.8 per cent).

You can also add in the Sunshine Coast, Ipswich, Toowoomba, Byron region, Wollongong, Mornington Peninsula, and several other areas. 

In February, the vacancy rate in Brisbane also fell to just 0.9 per cent.

Source: SQM Research

Sydney's vacancy rate fell back down to 1.3 per cent.

Source: SQM Research

Melbourne has been the one city with slightly better housing supply - but the vacancy rate fell here too in February, to 1.6 per cent. 

Source: SQM Research

Overall, the rental market is now about as tight as it's been since the global financial crisis, and especially bad in some of the coastal regions. 

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Dwelling stock value reaches $12.3 trillion

Property stock

The ABS reported that the value of Australia's dwelling stock rose to $12.3 trillion in the December quarter.

The national mean dwelling price rose by +2.7 per cent over the quarter to $1.07 million. 

Prices have increased for 13 consecutive quarters, noted the ABS. 

Source: ABS

Australia's annual GDP is under $3 trillion, so the ratio of dwelling stock to annual GDP is now back up to 4.3x. 

The reported numbers are preliminary estimates, but these figures showed an estimated increase of around 166,000 dwellings in 2025. 

Australia's estimated resident population figures are also subject to periodic revision, but it looks as though the average number of persons per dwelling has levelled off (having rebounded from the pandemic 'race for space' lows). 

The ABS noted:

"The mean price of residential dwellings rose in all states and territories this quarter, with growth most evident in Western Australia (7.5 per cent or $70,500), Queensland (4.8 per cent or $48,800) and South Australia (4.5 per cent or $40,800)."

---

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Population swings to WA & QLD

Population swings

Awesome charts from Dr Alex Joiner of IFM Investors below.

The working age population in New South Wales has now more than rebounded to its pre-pandemic trend, but in Victoria this has not been the case. 

Where have people been going instead?

The answer is largely to south-east Queensland and booming Western Australia. 

Brilliant and simple charts which help to explain so much about the Aussie economy and housing markets over the past 5 years. 

---

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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. 

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Podcast: Are buyers finding opportunities in this two speed market?

Property podcast

This week on the podcast Chris and I discussed:

• Inflation risks returning as global instability pushes up energy costs, with fuel jumping quickly in parts of Australia 
• Why the RBA may prefer waiting for quarterly data
• Evidence of a two speed housing market
• The on the ground reality for first home buyers at the lower end, including competition for scarce houses and buyers being pushed toward poorer assets amid FOMO 
• Negative gearing and CGT reform chatter ahead of the budget
• The core supply problem getting worse: building approvals down 
• Why approvals are still not enough for the national target
• Listener Q&A

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

You can also watch the YouTube version here:

---

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    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 over 4.6 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 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

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US nonfarm payrolls freeze up

Hiring freeze

The obvious doesn't really need stating here that things have seriously heated up in the Middle East, and this has sent oil prices soaring, with the Brent crude oil price surging to above $90.

Ouch.  A couple of weeks ago we had the luxury of unleaded fuel prices perhaps down in the mid-150s...now you might be paying around $2.20 (or perhaps a lot more) for a litre, depending upon where you fill up. 

Gas and shipping prices also seem likely to experience a burst of upwards pressure, which will lead to inflationary worries. 

It's less clear how long these pressures will persist for - it's doubtful anyone can say for sure - though no doubt the US will doing its utmost to secure all the oil it can.

Generally central banks might hope to 'look through' temporary supply shocks, particularly if business and consumer sentiment is also going to take a corresponding hit, but of course this case is trickier to argue for when the headline rate of inflation is already well above target. 

Back to the actual data, and the Bureau of Labor Statistics released the latest US nonfarm payrolls data, which showed an increase in the unemployment rate, albeit just to 4.4 per cent.

Granted, that's not a particularly high rate of unemployment, but the jobs growth figures have slowed significantly, and the participation rate fell to the lowest level since 2021 at 62 per cent.

In fact, nonfarm payroll employment fell by -92,000 in February, and the 3-month average employment gain has slowed to near zero.

Source: BLS

Clearly this isn't a great dynamic with rising inflation looking likely into an economy with so little net hiring.

Markets have been twitchy all week, but to date retail investors have appeared happy enough to buy the dips.

Indeed, the S&P 500 index for the year to date is down by just -1.7 per cent (and is still up 16.8 per cent from a year earlier). 

That's pretty remarkable when you consider that even before the Middle conflict flared up in earnest markets were already roiling on concerns around private credit, and SaaS stock prices were being walloped due to concerns of AI disruption. 

Interesting week or two ahead by the looks of it. 

James Foster ran through the latest weekly news in more detail here. 

---

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    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

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You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 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. 

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

Economy grew by 2.6pc in 2025

Economic growth picks up

It has been said that the Aussie economy picked up some surprising strength in  the second half of 2025, but that growth was heavily depending on big population growth and heavy government spending.

The national accounts for the December 2025 quarter did partly reflect that reality. 

The estimated population appears to have taken a large jump of more than 100,000 in the December quarter - perhaps this will be revised lower. 

Australia's economy grew up +0.8 per cent in the December quarter, seasonally adjusted, taking annual GDP growth up to +2.6 per cent...but with a timely lift in productivity. 

Public demand increased again by +0.8 per cent over the quarter, and government consumption increased to a new peak of 23 per cent of GDP (h/t Mark the Graph). 

GDP per capita increased for the fourth quarter on the bounce, to be +0.9 per cent higher than a year ago, so it's good to see living standards on the rise again. 

In current prices terms, nominal GDP hit a new high in late 2025.

Dwelling investment growth slowed from +2 per cent in Q3 to +0.6 per cent in Q4, but construction should remain solid in 2026 given the pipeline of housing underway. 

Consumer spending was surprisingly a bit lacklustre and slowed in Q4, as households shored up their finances a little (this weaker figure was also partly due to electricity rebates). 

At the household level, the saving ratio increased from 6.1 per cent to 6.9 per cent, which was the highest level since 2022.

The recent estimated increase in household savings rates has been in part down to lower mortgage interest payments, and this trend will reverse in 2026 as mortgage rates increase again.

Most borrowers in Australia are on variable rate mortgages, so the impact on consumers will be fairly immediate. 

Finally, Australia's terms of trade are off their highs, but still remain at a historically elevated level. 

James Foster ran through the national accounts in more detail here. 

The wrap

Overall, 2025 finished with the economy growing at a fair clip again, pushed along by a bigger government and high levels of government spending, both at the Federal and state level.

As for the outlook for 2026, Middle East tensions and conflicts have historically tended to dent business confidence.

Higher oil and petrol prices and the February rate hike will also serve to dampen consumer sentiment, while market pricing currently sees the cash rate target rising by 25 basis by May 2026, potentially going all the way back up to the cycle highs at 4.35 per cent by February 2027. 

---

1. Download our property buying guide

Download our free property buying guide here. 

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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 over 4.6 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 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.

Building approvals dismal ahead of rate hike

Approvals at 19-month low

Building were expected to rebound after last month's -15 per cent drop, but instead fell another -7 per cent to just 14,564 in January, seasonally adjusted, for the lowest result in 19 months.

Detached house approvals are declining in Melbourne, but a surge of permits in Perth over the past two years has helped to keep the overall figures reasonably solid.

Sydney saw just 649 houses approved in January, partly due to seasonality, of course. 

Unit approvals continued their gentle uptrend in Brisbane, but have fallen back in Sydney and Melbourne of late. 

Adding it all together it was a pretty miserable set of numbers for December and January, and this was obviously all before interest rates were increased in February. 

Annual dwelling approvals fell back to 193,500.

Over the past 19 months, approvals have been running at around 15,900 per cent month, which is obviously a long way short of what the government would like to see (at more like 20,000 per month). 

In other news, public expenditure again looks sets to add to the December quarter GDP growth (+0.3ppts contribution), so the National Accounts seem likely to show a reasonably solid result when they are released this week. 

James Foster stepped through the GDP partials here.

The Reserve Bank of Australia is naturally alert to inflation risks arising from oil and gas supply disruption, so the March meeting result and press conference will be an interesting one to watch. 

---

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 over 4.6 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 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.