Australia’s housing market is entering a phase where uncertainty itself is the main driver of behaviour, rather than any single factor like mortgage rates or affordability.
Ray White Group chief economist Nerida Conisbee argues that “the biggest challenge facing the property market right now is not interest rates, inflation or even affordability - it is uncertainty.”
Conisbee says multiple forces are moving at once, often in conflicting directions, making it harder for households and lenders to form a view on what happens next.
At the centre is the Reserve Bank. RBA is still trying to bring inflation back under control without tipping the economy into recession, with earlier rate hikes still flowing through to household budgets.
Markets are pricing in the possibility of more increases, but Conisbee warns that forward expectations are less a roadmap than a reflection of current assumptions that may not hold.
The current inflation pulse is being driven heavily by global factors RBA cannot fix, including supply chain disruptions and the Middle East conflict.
ANZ–Roy Morgan confidence is now at its lowest level since the survey began in 1973, a backdrop that tends to delay big-ticket housing decisions rather than remove demand altogether.
The duration and trajectory of the conflict add further uncertainty. There is no clear timeline for resolution, and each escalation has the potential to disrupt energy markets and inflation expectations. For policymakers this complicates forward planning; for households and investors it encourages caution.
Within the housing market, higher interest rates and uncertainty are moderating price growth, which Conisbee argues is not necessarily a bad outcome given the strength of recent gains across many parts of Australia.
At the same time, new housing supply is becoming more constrained. Labour shortages and rising construction and materials costs are making it harder and more expensive to bring projects to market, creating longer-term upward pressure even as demand softens.
Because energy is embedded in construction through diesel-powered machinery, freight and energy-intensive materials, rising fuel costs can further lift build prices and make it harder for central banks to cut mortgage rates, leaving borrowers facing tighter serviceability tests and reduced borrowing capacity.
Fiscal policy adds another layer of uncertainty. The upcoming federal budget and speculation about possible tax changes for property investors are already influencing timing, with some investors delaying or bringing forward purchases.
Conisbee describes the result as a complicated picture for the housing market, in which higher rates and living costs may moderate price growth, but weaker new construction deepens the existing housing shortage and shifts more of the strain into the rental market.
However, she also stresses that uncertainty does not persist indefinitely. Once key questions around interest rates, the budget, and geopolitical tensions start to resolve, activity typically improves, even if the eventual outcome is not entirely positive.
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