Hold onto your hats, construction costs to soar

Producer prices index

The Producer Price Index increased by only 0.4 per cent at final demand in the March 2026 quarter, according to the ABS, to be a fairly modest 3 per cent higher over the year. 

Over the past half decade, however, the index for producer prices has already increased cumulatively by 38.2 per cent. 

Source: ABS

Inputs to housing construction rose by 0.6 per cent in the March 2026 quarter. 

This is merely the calm before the storm, however, and construction cost inputs are getting set to soar again after a relatively calmer period since June 2023. 

Alex Joiner of IFM Investors charted the enormous increases in input prices since the pre-pandemic period. 

Source: Alex Joiner, IFM Investors

Over the three decades from 1996, construction cost outputs have more than tripled for houses, and are up by around 2.5x for attached dwellings.

The housing market might be in for a rough ride of the remainder of the year, but homeowners should probably hang in there as construction costs are in the process of exploding higher again.

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In other news, the number of temporary entrant visa holders in Australia (excluding visitors) rose to a new high of 2.62 million in March 2026, up by around 100,000 from a year earlier.

The term 'temporary' in this context may be a little misleading, since many temporary visa holders remain in the country for the long term.

Cotality reported earlier today that rental price growth had re-accelerated again to the fastest annual pace since 2024.

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Rental yields tick higher in the capitals

Price growth slows

From Cotality's monthly housing report for April 2026:

Source: Cotality

Prices in Sydney and Melbourne were down over the quarter by -0.9 per cent and -1½ per cent respectively. 

The AFR reported that properties priced above $1.9 million in Sydney had fallen by -3.1 per cent, while properties priced up to $900,000 rose by 1.9 per cent, as first homebuyers battled it out with investors at the lower price points. 

Source: Cotality

Rental vacancies remained near record lows, so rents rose by 5.7 per cent over the year, the fastest growth since October 2024. 

You can download Cotality's latest monthly report 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.

    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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What's happening in the property market?

Mixed signals

The Reserve Bank of Australia released the latest Financial Aggregates figures for the month of March 2026, which showed another solid 0.6 per cent growth result for business credit over the month.

The first impacts of the Iran conflict would barely have had time to take effect in these data, and over the year business credit rose by 9.9 per cent.

Overall, credit growth in the economy was a strong 8.1 per cent over the year. 

Housing credit growth also remained solid at 0.6 per cent for the month, and 7.3 per cent for the year.

Much of the growth of late has been driven by investors - especially focussed upon regional Australia given the dearth of rentals. 

Despite this, it appears that the housing credit impulse passed a peak at the end of 2025 at the national level. 

Australia's home value index is weighted towards Sydney and Melbourne, and prices in those cities are down by around -1 per cent in nominal terms over the past quarter. 

What's going on?

From chatting to agents and industry contacts it sounds as though the previously red hot Perth market is now finally just beginning to come off the boil, with further interest rate hikes pencilled in for May and beyond looking likely to end the cycle.

The Federal Budget on the evening of May 12 also appears likely to have some tax reforms which will adversely impact property investment. 

For the time being, Adelaide and Brisbane still seem to have some decent momentum. 

In Sydney there have been some examples of recent house sales achieving perhaps $200,000 to $400,000 less than might have been expected in the more ebullient environment of a few months ago.

While sentiment may be down, unit prices have been less impacted to date, which seems to reflect another explosion in construction costs and the higher demand in the lowest price points of the market (fuelled by the 5 per cent deposit scheme for first homebuyers). 

Market pricing is looking for a couple of further interest rate hikes, starting with 25 basis points in May.

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Budget reforms ahoy

Spit-balling a few thoughts on negative gearing changes, were the deductibility off losses to be quarantined to new build properties only.

Currently rental yields at the national level are 3.7 per cent for houses and 4.8 per cent for units.

Were the negative gearing benefit to be removed, it would seem logical that the rental yield would need to rise by at least 100 basis points, to account for the fact that the net rental losses could only be carried forward, rather than used immediately against other income.

You can play around with some assumptions in terms of gearing and expected mortgage rates. 

Source: SQM Research

Take Sydney as an example, where rents have increased markedly since 2020.

The median unit in Sydney rents - for the sake of round numbers - for around $40,000 per annum. 

Source: SQM Research

With a median unit value of $907,000 this equates to a gross rental yield of about 4.4 per cent. 

Source: SQM Research

If the median unit price was to fall by 10 per cent (in nominal terms) and rents increased by 10 per cent, this would take the gross rental yield up to a more manageable 5.4 per cent (versus a mortgage rate of around 6 per cent). 

The price drop for houses might be steeper, though there are more owner-occupiers driving that part of the market too.

The above having been said, previous modelling from the CIS, Grattan Institute, and others, has claimed that nominal prices would likely fall by only 1 to 4 per cent, due to other shifts in supply and demand. 

Nobody knows for sure, but with this debate having run for decades now, it certainly won't be dull. 

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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

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

Most overseas born Aussies now from India

India now leads

The proportion of Australia's population born overseas rose to 32 per cent in 2025, which was the highest share since the gold rush (the foreign born share was last this high back in 1891). 

Source: ABS

In a landmark change, for the first time since 1788 England was not the most common overseas country of birth.

At the time of the Sydney Olympics in 2000, India didn't even feature on the top 10 overseas countries of birth at just 90,000, but now at 971,000 is top of the chart. 

Source: ABS

While the number of English born and Italian born declining over the past decade, there has also been a resurgence in Chinese-born Australians (up to 731,500).

I noted on a recent blog post that Australia's relationship with China has gradually been repaired since 2018, and this is being reflected in more tourism and short-term arrivals. 

Over the past 10 years the number of Indian-born persons in Australia has comfortably more than doubled from 449,000 to 971,000. 

Source: ABS

The largest impact by far of Indian migration has been seen in Melbourne.

In other states, there are variously dominant overseas-born populations. 

Looking ahead, it's clearly going to be an Asian century for Australian demographics.

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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 over 5 million hits 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.

Inflation at 4.6pc in March

Inflation rise further above target

Against a backdrop of the biggest oil shock since the 1970s, the inflation figures were released for March 2026.

Headline inflation came in at 4.6 per cent over the year, a little below the median market expectation of 4.8 per cent.

Surprisingly, trimmed mean inflation was flat at 3.3 per cent for the 12 months to March 2026 (and 3½ per cent for the March 2026 quarterly data). 

Source: ABS

No prizes for guessing the main source of the increase in March, with auto fuel prices steepling 33 per cent higher.

Unleaded prices rose 30 per cent in March, while diesel prices jumped by 41 per cent to above $2.50 per litre. 

Over the year to March, the increase in fuel prices was dwarfed by an even larger increase in electricity prices as the rebates have rolled off. 

Interestingly, fuel prices have since fallen back down to earth, but this is partly due to the government's fuel excise cut, and it's not yet clear whether this temporary policy will be extended into the new financial year.

Housing costs continued to rise, with new dwelling prices becoming ever more expensive, and rents looking very likely to accelerate given record low rental vacancy rates. 

New dwelling costs had increased by 48 per cent since 2017 up until March 2026, but this increase is about to get much steeper again as materials costs bite.

Australia's 3-year bond yield fall back quite sharply on the news, to 4.68 per cent at the time of writing. 

That having been said, it is logical that many of the impacts of the Iran conflict will not be felt in the consumer price index until the June and September quarters.

The Reserve Bank of Australia has already hiked interest rates in February and March. 

Although some news stories noted that the the softer than expected inflation figures for March give the central bank the option to wait until after the May Federal Budget before making a move on interest rates, the path of least regret is still most likely to be a 25 basis point hike on May 5.

This will take the cash rate target back up to the previous cycle high of 4.35 per cent.

James Foster ran through today's inflation figures in more detail here. 

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1. Download our property buying guide

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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 5 million hits 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.

2-Sense: What tax reforms mean for the housing market

Property podcast

There's some talk of capital gains taxes being cranked up for all asset classes.

If that happens then maybe people will focus more on buying an expensive home, and less on investment.

Here's what Chris and I discussed on the podcast this week:

What potential changes to capital gains tax and negative gearing could mean for investors and renters, then zoom out to the bigger forces shaping the property market.

Key topics:

• Possible CGT and negative gearing reforms, and the flow-on to investor demand, rents and buyers
• Oil prices, bond yields, sticky rents, and shaky confidence in Sydney and Melbourne
• The role of immigration and supply in ongoing housing pressure
• Listener Q&A on refinancing, fixed vs variable rates, and whether to wait or back high-quality assets

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 over 5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17,000 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.

Budget night live....

Budget night review

A date for your diary...the evening of May 12 when we will watch the Federal Budget online and give our thoughts on the property and other tax changes resulting therefrom.

I can't remember how many years we've been doing this but it's always a good event. 

You will be able to watch along live at Facebook here or YouTube here:

See you there. 

---

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 4.9 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17,000 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.

Rents rose 2.1pc in the March quarter

Rents accelerated

Rents increased by 2.2 per cent in Australia's capital cities in the March 2026 quarter, with strong increases recorded in every city.

Rents in Perth and Brisbane rose by 6.7 per cent over the year respectively.

From Cotality's rental review report:

Sydney had the highest rental price, rising 5.9 per cent over the year to $824/week, with Melbourne the lowest at $632/week.

Rents have thus reaccelerated and have increased by about 50 per cent since 2020.

You can download the Cotality report here.

---

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 4.9 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 17,000 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.