Here comes the data centre boom

Data centre boom

Household spending fell -1.1 per cent in April, with discretionary spending posting its worst result in over two years in falling by -0.8 per cent, as demand destruction in this cycle begins to bite.

In truth, there aren't all that many bright spots in the Aussie economy right now, but the huge surge investment in building data centres (and related equipment spending for fit-outs) and is certainly one of them! 

CapEx reports had been curiously soft up until December 2025, even though it had become obvious that planned expenditure in the sector was ramping up.

Finally we got a boost in the March 2026 quarter, with private new capital expenditure up by 6½ per cent in the quarter, and up 14.6 per cent over the year. 

Investment in IT & telco equipment is suddenly up more than 10-fold since the end of 2023 as the chart turns vertical. 

Source: ABS

James Foster ran through the detailed figures on his blog here. 

Sydney to lead investment

Where will the key data centre hubs be in Australia?

The main beneficiary is set to be Sydney, perhaps most notably the Macquarie Park, Ryde, and Artarmon cluster, as well as Rosehill, Parramatta, Marsden Park, and Horsley Park.

And then there are to be multiple sites in Western Sydney, such as Eastern Creek, Erskine Park, Kemps Creek, and Mamre Road. 

Melbourne has the comparative advantage of swathes of flat and relatively accessible land in its western suburbs and will evidently become a rapid growth challenger in the race for data.

The data centre boom will bring more employment, construction activity, and high-wages jobs to Sydney and Melbourne, for construction workers, electricians, and technicians, with further grid infrastructure to follow. 

In time, there are expected to be economic multipliers and productivity gains across multiple sectors of the economy. 

Brisbane, Perth, Adelaide, and Canberra will all see investment in data centres, albeit at a lesser scale and rate of growth.

Countries in Europe have lately been grappling with high power prices, now calling into question how energy-hungry data centres will impact the energy sector, while thirsty water use is another sustainability concern for the explosion in data centres. 

In other news, the Federal budget has apparently resulted in a continuing downtrend in polling for the ALP government, with interest groups lobbying hard for a walk-back in the capital gains tax proposals for businesses.

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Resi construction slowed...except here

Construction headwinds

Engineering construction leaped by 6.9 per cent in the March quarter, driven by a huge $3½ billion increase in Western Australia (probably some of which will prove to relate to capital investment). 

Elsewhere, non-residential building work done was solid enough, but it seems very likely that public infrastructure works will continue to tail off from here. 

Residential construction work done surprisingly fell by -0.6 per cent in the March 2026 quarter, as new homebuilding slowed in all of the most populous states. 

There is one bright spot for residential construction, being for medium- and higher-density projects in Queensland.

Yes, this is partly in the city of Brisbane, but also in this cycle is much driven by the Gold Coast, Redcliffe and Moreton Bay, Caloundra and Maroochydore etc.

Steepling new dwelling construction costs remain a significant concern for developers. 

It also appears that many homeowners are also choosing to stay put rather than upgrade, reflected in rising renovation expenditure (up 3.7 per cent in the March 2026 quarter, and up by 9.4 per cent over the year).

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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 here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17k 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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Inflation falls to 4.2pc in April

Inflation softer than expected

We're in the midst of a significant reset for housing market sentiment, and one of the ways in which that rebalancing will likely happen will be through interest rate expectations. 

This dynamic got a further helping hand today as headline inflation came in at 4.2 per cent over the year to April, quite well below market expectations, and down from 4.8 per cent in March. 

Source: ABS

Lower inflation was assisted by the fuel excise cut and rent assistance.

On the other hand housing price inflation (6.3 per cent) remained hot, in the form of electricity, new dwelling costs, and rents (suppressed somewhat by the Commonwealth Rent Assistance). 

New dwelling costs rose another 0.7 per cent in the month to be almost 5 per cent higher over the year and in a clear re-acceleration trend, having already experienced a huge run-up over the past few years. 

Source: ABS

The annual movement in trimmed mean inflation was 3.4 per cent in April, up from 3.3 per cent in March.

Source: ABS

Overall, futures markets welcomed the softer than expected result, with the Australian 3-year bond yield now trading at 4½ per cent.

Nothing is priced in for June now in terms of policy rate changes, with about a possible 20 basis points worth of hikes priced in for the remainder of 2026, well down from almost 40 basis points before the weak labour force survey last week.

Source: Bloomberg

Justin Fabo of Antipodean Macro charted the sharpish repricing in cash rate expectations expectations after the jobs report, which shows that another hike remains possible in this cycle, if no longer fully priced in. 

James Foster ran through the April inflation figures in more detail here. 

In other news, residential construction work done fell in the March 2026 quarter, which I'll look at in a separate post.

---

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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

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17k 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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Is property investing dead? What the Budget means for buyers, rents and prices

2-Sense podcast

Lots for Chris and I to discuss in the podcast this week, with the Budget announcements sideswiping property market sentiment. 

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 here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17k 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.

Unemployment rate highest since 2021

Unemployment jumps

Employment fell -18,600, seasonally adjusted, in a much weaker than expected April labour force survey (taken in the early part of the month). 

The 3-month average employment gain slowed to just +11,000, far below the increase in working age population and the labour force. 

The number of unemployed persons, meanwhile, rose by +33,000 to 692,500 in April.

Arguably the only metric that really matters is the unemployment rate, and it surged a fair bit from a seasonally adjusted 4.3 per cent to 4½ per cent, to sit above the Reserve Bank's forecasts and at the highest level since 2021.

At the state level there appears to be some upwards pressure on unemployment in Victoria and Tasmania.

For now the national measures of underemployment and underutilisation don't look too bad.

However, there has been a sharp rise in youth unemployment, which often foreshadows a weakening economy, and is perhaps reflective of some AI disruption to entry level roles. 

The growth in the population has also reaccelerated to the fastest pace since 2024, which naturally won't help with the concerning uptrend in unemployment. 

The wrap

Overall, it was obviously a considerably weaker than expected result this month.

The statistics relate to a survey in early April, so can't yet have seen the effect from 25 basis point interest rate hikes in February, March, and May, as well as the crushed business sentiment related to the oil price shock (and any forthcoming consumer sentiment hit from the Federal Budget). 

Australia's 3-year bond yield slunk back to under 4.6 per cent, from up at around 4.8 per cent earlier in the week, as markets assess that the interest rate hiking cycle might just already be done. 

The implied terminal rate for this cycle has eased from 4.82 per cent earlier in the month to 4.6 per cent, with one further hike potentially priced in for Q3. 

Source: Bloomberg, h/t Tony Sycamore, IG

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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 here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17k 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.

Economy starting to roll over

Jobs ads recede

Job ads fell -0.9 per cent in April to 212,000 online advertisements - and are now lower over the year - according to the latest government statistics. 

Source: Jobs & Skills Australia

The slowdown in hiring has been driven in part by Canberra cutbacks (with vacancies in the ACT down by -15.7 per cent over the year) and a somewhat sluggish result in Victoria (-2.3 per cent). 

Source; Jobs & Skills Australia

Hiring to slow in 2026

Tomorrow morning the ABS will release the labour force survey for April, with the median market forecast expecting a slower trend in hiring, but the unemployment rate holding for now at just 4.3 per cent, seasonally adjusted. 

It's probably still too early too see much meaningful impact in these figures from the Iranian conflict, three 25 basis points interest rate hikes...and now in May a confidence-sapping Federal Budget tax grab (needed to fund runaway spending on the NDIS and other projects). 

Following recent central bank communications - including the latest Board Minutes - markets are pricing for an interest rate pause in June, and indeed journalists and interviewers are suddenly now discussing the possibility of a technical recession.

Still, there is plenty of inflation to be absorbed from the oil price shock, and markets are still looking for one further interest rate hike in this cycle before the peak is reached.

Separately, S&P Global released the latest Services PMI figures, which showed the private sector economy contracting, and business sentiment at the weakest reading on record. 

Polling latest

Although Federal Budgets can shift short-term consumer sentiment, rarely do they much impact political polling.

There's been some debate as to whether the seismic tax changes announced in this Budget - to negative gearing, capital gains taxes, and trusts - will see government popularity take a knock.

In truth, the full impacts of the policies won't be seen for at least a couple of years, so it's hard to say, but the early signs aren't exactly looking amazing for the government. 

The government's saving grace may be that the conservative vote has fractured and split.

These are highly contentious changes to tax legislation, and it feels like there's plenty of water to flow under these bridges even before the next election.

If you'd like to discuss what the Budget changes mean for your strategy or portfolio, shoot me an email pete@allenwargent.com 

---

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 here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17k 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.

Asking rents begin to rise

Asking rents lift

An index which will see some attention over the coming months is SQM Research's asking rents index.

It's early days, of course, being only one week on from the Federal Budget.

Given there are so rental regulations these days (60 days notice to raise rents for a tenant, rental increases limited to one change per year, and so on) it's obviously going to be some time before we get a clearer read on what's happening to actual rents.

Still, the index asking rents can be a useful leading indicator foretelling what is to come. 

This week, asking rents across Australia rose by +0.4 per cent for houses and +0.7 per cent for units. 

Source: SQM Research

Asking rents for houses rose by $3 to $777 per week, and asking rents for units rose by $4 to $604 per week. 

Notably rents are down a bit in Perth and Adelaide lately, following a monster run-up since 2020.

Instead, the recent increases in asking rents have been driven by strong gains in Sydney and Brisbane, as well as Canberra, Hobart, Darwin, and many parts of regional Australia, such as Newcastle, Hunter Valley, Sunshine Coast, and others.

This index will be worth watching over the next few months to see how successful landlords are at passing on the forthcoming higher costs to tenants. 

If you'd like to discuss what the Budget changes mean for your strategy or portfolio, shoot me an email pete@allenwargent.com 

---

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 here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17k 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.

ausbiz TV: Will housing tax changes bring prices down?

ausbiz TV

I joined Andrew G at ausbiz TV to discuss the Budget outcomes for property.

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

If you'd like to discuss what the Budget changes mean for your strategy or portfolio, shoot me an email pete@allenwargent.com 

---

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 here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17k 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.