Triple whammy for rental supply shock

Inflation stuck at 3.8 per cent

The ABS released the monthly inflation gauge for January 2026, and it remained at a sticky 3.8 per cent reading over the year to January for headline inflation. 

Trimmed mean inflation came in at 3.4 per cent, which was a bit above the median market expectation of 3.3 per cent. 

Source: ABS

Housing remains a key issue, with housing inflation swelling up to 6.8 per cent over the year (from 5½ per cent in December), partly driven by rents and new dwelling costs. 

Not surprisingly, a big ticket item was electricity costs, which spiked 32.2 per cent higher over the year (up from 21½ per cent in December) as government rebates unwind. 

This factor wasn't altogether unexpected, but still bond yields moved a little higher on the sticky inflation release, moving back up to 4.28 per cent for the 3-year Aussie government bond. 

It has been the case historically that inflation can sometimes be 'hotter' in the first month of the quarter - and less so at the end of the quarter - so perhaps partly for that reason markets are pricing interest rates to be most likely on hold in March. 

However, there is now a very good chance that there is another interest rate hike at the May meeting once the next more comprehensive quarterly data are released.

This would take the cash rate target back up to 4.10 per cent, while most other developed countries are eyeing up lower interest rates in 2026. 

You can read through more details on the inflation release with James Foster here.

Rental shocks

In other news, construction work done was well below expectations in the December 2025 quarter, declining slightly from the September quarter.  

Even the discussion of another potential interest rate hike will dampen conditions for developers and the sentiment for housing market investment.

There's also been a lot of media over the past fortnight which appears to be softening up the electorate for a prospective hike in capital gains taxes, which also won't encourage rental supply. 

The ALP government as a general rule appears to favour institutional ownership of rental housing and superannuation fund investment in housing, via the Build to Rent (BTR) model, while not discouraging individual landlords. 

The problem is that most of the potential sites for BTR are not viable to generate the required returns given high construction costs and the increasing cost of capital.  

Rising interest rates

How has Australia seen demand rebound so strongly when most peer countries seem to be shaping up to cut interest rates in 2026?

A big part of the story must be state and Federal government spending which has remained high as a post-pandemic legacy, the spiralling costs of the NDIS disability scheme, and investment in various infrastructure projects. 

South-east Queensland doesn't appear to have enough construction workers to deliver its new housing, road and rail infrastructure, and a wide range of large projects in the lead-up to the 2032 Olympics, including new stadia at Victoria Park and Maroochydore, a new aquatic centre, and the tennis centre expansion. 

Elsewhere, Victoria's $100-billion-plus Big Build continues apace, forthwith in the form of the Melbourne Airport Rail Link, and this is giving rise to some bountiful pay increases. 

Meanwhile the $93 billion proposed Sydney to Newcastle high-speed rail project is all over the newswires this week.

All of this is clearly going to create a lot demand and will require thousands of skilled construction workers, but it's equally not clear where they're all going to live. 

---

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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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Podcast: CGT reform, more rate hikes, rental market stress

Property Podcast

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

• Unemployment holding keeps the possibility of further rate hikes alive
• First-home buyers continue pushing ahead
• Record quarterly housing finance and lift in investor lending show capital is still active
• Winding back the CGT discount may reduce flipping but is unlikely to deter investors
• Vacancy rates near record lows
• Without investor participation, rental availability deteriorates further
• Seller behaviour matters more than headlines; listings remain historically tight
• Listener Q&A

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 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 16,500 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.

Solids jobs data; unemployment rate holds at 4.1pc

More jobs

Employment growth was solid in January, rising by a seasonally adjusted +17,800 to a new high of 14,703,800.

The result was driven by a strong +50,500 monthly uplift in full-time employment. 

The annual growth in employment appears to have settled in at around +1 per cent, well down from the post-pandemic highs. 

And the 3-month average change in employment slowed just a little to +19,000.

The re-tightening of the labour market in recent months has been as much about supply, as it has demand. 

Over the past year the labour force participation rate has fallen from a high of 67.2 per cent to 66.7 per cent. 

As such the number of unemployed persons fell for a 4th consecutive month, and the unemployment rate has held firm at a low seasonally adjusted 4.1 per cent through December and January. 

Victoria has an unemployment rate of 4½ per cent, while most other states and territories are running at around 4 per cent or even lower. 

The underemployment rate increased modestly from 5.7 per cent to 5.9 per cent in January, and the underutilisation rate rose slightly from 9.8 per cent 10 per cent - both readings are still tight. 

What to make of it all?

A recent lift in job advertisements seems to have translated into some renewed strength in the jobs market.

Although the growth in employment at around +1 per cent over the past year is way short of the estimated growth in the civilian population aged 15 or over (which has surged by an estimated +1.85 per cent or +416,700), the participation rate has also fallen quite significantly a year ago.

Thus while the United Kingdom has seen a worrying surge in youth employment and Canada has experienced an alarming surge in its unemployment rate, Australia sits relatively pretty with an unemployment rate of just 4.1 per cent. 

Yes, this has come at a cost - much of the jobs growth has been in healthcare, the public sector, and government-aligned roles, and inflation rate is now back above target as population growth remains strong - but it also puts policymakers in a pretty solid position to adjust course as required.

James Foster ran through the key figures in more detail 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 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.

Wages pick up a bit (but backwards in real terms)

Real wages slide

Wage price growth came in at a seasonally adjusted 0.8 per cent, as expected.

To a couple of decimal places, the quarterly growth picked up a little from 0.77 per cent to 0.82 per cent.

Over the year wage price growth has been above 3 per cent for 14 quarters consecutively, but at 3.4 per cent was below headline inflation of 3.8 per cent over calendar year 2025. 

It was the first time in two years that real wages growth has turned negative. 

Private sector wages growth picked up a little from 0.77 per cent to 0.83 per cent in the December quarter.

However, over the year wages growth remained higher in the public sector (3.98 per cent) than the private sector (3.39 per cent). 

Not surprisingly around ¾ of the wages growth in the December came from healthcare and social assistance - the king of all growth sectors in Australia. 

The other sectors to see wages growth of above 4 per cent in 2025 were public administration and electricity, gas, and waste services. 

The ABS commented:

‘Strong growth in public sector wages for 2025 was due to new state public sector agreements that delivered multiple pay rises over the course of the year."

At the state and territory level, the strongest wages growth was seen in Western Australia (4.1 per cent), but has fallen away sharply in the Northern Territory (2.2 per cent). 

The strongest growth in the December quarter was in New South Wales at 1 per cent. 

Overall, the result was in line with expectations, with some tentative signs of wages growth picking up in the private sector. 

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In related news online jobs ads jumped 3.6 per cent in January, although they were slightly lower (-0.9 per cent) than a year earlier. 

The main handbrake has been Victoria where ads are down -4.7 per cent over the past year, but lately things seem to be picking up a bit. 

---

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. 

ausbiz TV: Tax reform, rental crush, and the rise of the YIMBYs

ausbiz TV

I joined Andrew G at ausbiz TV to discuss all the latest property news.

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

---

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.

Podcast: 7 nuggets of property market wisdom for 2026 and beyond

Property Podcast

This week on the podcast, I discussed 7 key nuggets of property investing wisdom for 2026 and beyond. 

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

You can also watch the YouTube version 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 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.

Rental market going Troppo

Rental market crush

The ABS released the latest arrivals and departures figures this week up to December 2025, which showed a continued reacceleration in net permanent and long-term arrivals (for what it's worth, to +480,000). 

Short-term arrivals also continued to recover, helped along by record short-term visitors from the United Kingdom, mainly for the Ashes cricket series. 

A fair bit of ink has been expended on the relevance or otherwise of "net long-term arrivals" (and in turn what this does or doesn't mean for the economy), with the growth in the estimated resident population easing to +420,100 over the year to June 2025. 

But - strange though it may seem! - most people don't spend a lot of time analysing definitions of NOM and graphs from the Australian Bureau of Statistics, but are more likely to be influenced by everyday experiences of chokkas traffic or long queues outside rental properties. 

In any case, net permanent and long-term arrivals began to reaccelerate in early 2025, and within a couple of months rents also began to reaccelerate, according to Cotality. 

Cotality reported this week that rents began to reaccelerate in mid-2025, and rose +5.4 per cent in 2025 (including by +6.1 per cent in regional Australia). 

Source: Cotality

Rental vacancy rates remained near all-time lows at 1.7 per cent, and worryingly this was before the usual surge in new arrivals which happens in February, in line with the University semester. 

Cotality noted rents have outpaced wages by a factor of three over the past half-decade, rising by +44 per cent, with rents up a rapid +66 per cent in Western Australia. 

Source: Cotality

Meanwhile sales listings also remained tight in January, at -24 per cent below the 5-year average for the time of year. 

Housing prices rose +2.4 per cent in the 3 months to January, and +9.4 per cent over the 12-month period.

Source: Cotality

You can download the latest Cotality Chart Pack for the month of February 2026 here. 

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In other news, the Federal opposition actioned the widely-expected leadership spill this week, with the new leader setting out a stall for a slowdown in migration.

In a distant echo of European polling trends, it seems that Australia's next Federal election in May 2028 will see a sharper focus on immigration settings. 

---

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.

Housing lending surges in Q4

First homebuyer scheme kicks in

The number of first homebuyer loan commitments increased 6.8 per cent in the December 2025 quarter, as the 5 per cent deposit scheme began to take some effect on the market. 

It's still early days for the scheme, though. 

The number of investment loans also increased by another 5.5 per cent over the quarter, to be 23.6 per cent higher over the year. 

Source: ABS

With loan sizes also increasing, the total value of new loan commitments rose to a record $108.3 billion over the December 2025 quarter, with upwards revisions taking the annual growth all the way up to 23.5 per cent.

The quarterly value of investment lending rose to a new high of $43 billion, up by 31.8 per cent from a year earlier, with a solid pick-up notable in Victoria in the December quarter.

Source: ABS

The average loan size for homebuyers in New South Wales rose from $810,000 to a record $873,000 in 2025, while Queensland also saw a significant increase from $650,000 to $736,000.

The government has been throwing around a few numbers during Question Time about the number of first homebuyers taking up the 5 per cent deposit scheme, but any make shift is not yet evident in these figures.

Source: ABS

In any case, on this basis it looks likely that the bottom quartile of the market will be under some pressure in 2026 as first homebuyers begin to pile in. 

New dwelling supply continues to run slowly versus previous cycles, in part because it's taking so much longer to deliver attached dwellings these days. 

Justin Fabo of Antipodean Macro charted the change:

Indeed, Westpac noted that under 5 per cent of lending was for new dwellings in the December quarter, which was the lowest share on record. 

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

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Commonwealth Bank released its latest half-year results which showed a lift in profits and dividends. 

The loan book generally looks in good shape at the moment, with 30-day arrears falling to 1.1 per cent, and most borrowers in decent nick. 

Victoria had the highest level of arrears, though no states or territories were particularly high.

90-daye home loan arrears were higher for owner-occupiers versus investors. 

Loans in hardship are down 28 per cent since 2024, yet still remain a bit higher than the pre-pandemic level.

With the 3 percentage points lending assessment buffer in place, most loans now go to households with an income of $200,000 or above (while virtually no loans are written to households earning under $100,000). 

Source: (ASX: CBA)

The rapid rise in the Aussie dollar continued today, all the way up to 71.1 US cents, touching a 3-year high. 

---

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.