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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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. 

---

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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. 

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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. 

---

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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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Listen in to our podcasts

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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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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. 

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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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Unemployment rate drops to just 4.1pc

Jobs rebound hard

I noted on the Twitter that there could easily be a +50,000 rebound in headline employment in December after last month's surprise drop. 

In the event, we got +65,200, a big rebound to a new high of 14.68 million employed persons. 

Looking through the seasonal volatility and noise, the 3-month average employment growth was about +25,000 in Q4 2025, essentially in line with what we saw back in Q2. 

Over the year to December, employment increased by around +165,000, or a somewhat more sedate +1.1 per cent.

Interestingly, this is a far slower rate of growth than was seen in the aged 15+ civilian population, which reaccelerated as the year went on to +426,000 or +1.9 per cent. 

It's not difficult to see why housing supply targets are not being met, while rents and construction costs appear to have reaccelerated. 

However, the labour force participation rate is well down from the highs, down by -0.4pts from 67.1 per cent to 66.7 per cent over the year to December 2025. 

As such we got a huge drop in the seasonally adjusted monthly reported unemployment rate to just 4.1 per cent, down from 4.4 per cent in September and the lowest since May 2025. 

The seasonally adjusted underutilisation rate also dropped from 6.2 per cent to just 5.7 per cent.

Overall - even allowing for the wild volatility, this was a much stronger result than expected.

In fact, the median market forecast from economists was for an unemployment rate of 4.4 per cent! 

The 3-year bond yield jumped to above 4.2 per cent, and the Aussie dollar has continued its screaming run higher up to above 68.2 US cents. 

James Foster ran through the figures in more detail here. 

The wrap - what next?

This stronger than expected result puts a February interest rate hike squarely in the frame at about a 50:50 chance. 

The final call will be determined by the December quarter inflation figures. 

On the one hand, the monthly inflation figures pointed to some apparent downside risk for Q4 inflation (indeed, Westpac have now revised down their forecast to a benign 0.5 per cent for headline inflation, and 0.7 per cent for trimmed mean inflation). 

On the other hand, there are some signs that rents and construction costs have picked up again, while unprecedented crowds at the Ashes, the Australian Open, and some 40,000 punters at the first day's reopening of the Sydney fish markets (versus a 5,000 capacity) all seem to speak to an ebullient consumer. 

The key inflation figures will be released next week on Wednesday morning. 

---

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Listen in to our podcasts

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    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

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

Dwelling starts rise a little further

Housing starts rise

More approved dwellings got underway in the September 2025 quarter, especially in Victoria.

The number of dwellings commenced nationally rose to a seasonally adjusted 48,800.

Yes, this is still way below the government's implied target of 60,000 per quarter, but starts are off the cycle lows of September 2023, and have been trending higher for two years, to the highest level in the 3½ years since March 2022 quarter.

Completions, on the other hand, remain very sluggish, with only 44,000 homes delivered by the private sector - a figure actually lower than a year earlier. 

High construction, labour, and material costs - combined with skills shortages - have been to blame for a surge in development company insolvencies. 

The number of dwellings under construction has thus continued to increase since the end of calendar year 2024, though it's a little hard to gauge whether any of these projects are stalled, delayed, or mothballed. 

The increase in units, apartments, and townhouses under construction has largely been driven by undersupplied south-east Queensland, particularly the Gold Coast. 

Overall, although housing supply is still slow, there are some more solid signs that for more than two years the number of dwelling starts has been trending higher, since the September 2023 nadir. 

---

1. Download our property buying guide

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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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ausbiz TV: Fixed mortgage rates rising

ausbiz TV

I joined Juliette on ausbiz TV to talk about what's happening in the housing market early in 2026, including with lending.

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

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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

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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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Podcast: Property in review for 2025, and the 2026 outlook?

Australian Property Podcast

Chris and I took a look at 2025 in review, and the property market outlook for 2026.

Here's the episode overview:

Episode overview

• 2025 – strong price growth in Perth and Brisbane, also Darwin boomed
• 2026 – forecasts. SQM’s Boom & Bust report for 2026
• Interest rates – no cuts priced in at all for 2026
• RBA expects inflation to be in the target band later in 2026
• Listings – will they stay tight?
• How to make a property plan for 2026

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 15,800 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.