“The economic fallout from the Middle East will not be evenly distributed across the global economy,” said Ray White Group chief economist Nerida Conisbee (pictured). For Australia, the split is especially stark.
On one side, higher oil and gas prices typically boost commodity export income. As a major LNG and coal exporter, Australia can see national income and government revenues rise when global energy markets tighten. Resource-rich states such as Western Australia and Queensland benefit from stronger royalties and company tax receipts when miners’ profits lift.
On the other side, “Australia sits in a more complex position” because it imports most of the fuel used domestically. That means energy shocks flow quickly into higher petrol and diesel prices, pushing up transport costs for households and businesses. For mortgage brokers working with first-home buyers and property investors, this adds another layer of pressure on living costs and borrowing capacity at a time when many borrowers are already stretched.
The immediate impact is felt at the bowser, but higher fuel prices ripple across the broader economy.
Freight becomes more expensive, lifting the cost of groceries and goods. Airfares rise, and operating costs increase for fuel‑intensive industries. Outer suburban and regional households, which rely more heavily on cars and face longer commutes, are hit hardest.
For the housing sector, the challenge is two‑fold. Energy is embedded in construction via diesel‑powered machinery, transport, and energy‑heavy materials such as steel, cement, and bricks.
As fuel costs rise, new housing becomes more expensive to deliver. At the same time, persistent energy‑driven inflation makes it harder for central banks to cut mortgage rates, leaving borrowers with tighter serviceability tests and reduced borrowing capacity, Conisbee said.
Development feasibility, particularly for higher‑density projects that rely heavily on debt, becomes more marginal. Fewer projects “stack up”, slowing the pipeline of new supply even as population growth continues.
“The result is a complicated picture for the housing market,” Conisbee said.
Conisbee said price growth is likely to moderate as higher interest rates and living costs bite, but weaker new construction will deepen the existing housing shortage. As of early 2026, PropTrack data show national home values are about 9% higher than a year ago, with cheaper capitals and lower-priced homes now leading much of the growth.
In practice, that combination of elevated prices and constrained supply often shifts the strain into the rental market. Limited new stock and strong demand keep rents elevated even when house price growth cools.
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