Australia’s housing outlook is unusually murky, with Domain’s latest analysis pointing to a mix of war in the Middle East, rising fuel and energy costs, still‑elevated inflation, possible further rate hikes, and a chronic shortage of homes for sale or rent.
Ray White chief economist Nerida Conisbee (pictured left) told Domain, “We can see that really affecting the market in both Sydney and Melbourne, where attendance at open for inspections has dropped right off,” even as other cities remain more resilient.
She notes that upsizers and some cashed‑up property investors are still active, while many first‑home buyers and more leveraged households are choosing to wait for clearer signals on mortgage rates and prices.
Domain highlights how the usual relationship between mortgage rates and prices is being scrambled.
Independent analyst Eliza Owen (pictured center) points out that construction costs jumped about 10% in April alone, while more rate rises are likely, a combination that would normally sap demand. Yet price falls have been modest because so few homes are available.
Owen stresses that this tension between weaker borrowing capacity and tight stock has been building since the COVID period, when construction backlogs, labour shortages, and strong migration all combined to keep new supply from catching up.
That imbalance is most obvious in Perth, where Owen says strong gains reflect “such a deficit of supply relative to demand,” while Melbourne, with more new land and softer demand, looks more exposed to price declines.
Brisbane and Adelaide, by contrast, are described as “middle‑ground” markets, where prices are still edging higher but at a slower pace than Perth, and listing volumes remain low enough to cushion the impact of higher mortgage rates.
University of South Australia housing economist Chris Leishman (pictured right) warns that it is “pretty pointless… to spend too much time worrying about what is, essentially, completely unpredictable,” noting how COVID‑era forecasts of a crash turned into an historic boom instead. Leishman argues that many of today’s forecasts could prove just as unreliable if a new shock – or a faster‑than‑expected fall in interest rates – changes conditions again.
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