Australia’s Property Market Faces a More Complex Outlook as Pressures Build

The past few weeks have brought a rapid succession of events affecting the nation’s economic and property landscapes. Two RBA cash rate rises so far this year has monetary policy approaching restrictive territory, with the cash rate now sitting at 4.10 per cent.

The February decision to lift the cash rate was largely anticipated given persistent inflationary pressures, however the March rise is harder to separate from the current geopolitical picture.
Conflict in the Middle East continues to escalate at the time of writing, driving energy price volatility and feeding through to further inflationary pressure in a way that will have an influence on the Reserve Bank’s thinking. Events have been moving quickly enough that some of our own contributors this month have been caught out by developments unfolding between the time of writing and publication.

On the regulatory front, APRA has moved on its debt-to-income caps for investors, cooling activity among highly leveraged buyers while favouring those with strong equity positions. It is a meaningful change to investor finance, and its full effect on market activity will become clearer in the months ahead.

Then there’s the upcoming May federal budget and speculation around possible changes to the Capital Gains Tax (CGT) discount and negative gearing arrangements. Whilst nothing has been confirmed by the federal government at the time of writing, it is clear that momentum is building, creating uncertainty whether the current CGT regime will be grandfathered, or if there will be broad-based change in all future tax years.

Herron Todd White is watching any change to the CGT regime closely, and for good reason. Any changes that reduce the after-tax return on residential property could dampen investor appetite precisely when rental supply is already under severe strain. The potential consequences for the supply side of the rental market deserve careful consideration by policymakers.

The financial services sector is currently responding to the increased evidence of systemic mortgage fraud, be that loans originated through the broker industry, or borrowers empowered by generative AI to misrepresent the characteristics of their property. When this occurs, it is a timely reminder that the only unbiased opinion of the value of a property is achieved through a physical inspection by a qualified property valuer. Adapting to the age of GenAI, Herron Todd White has now initiated identifying whether images of properties, be they frontage, aesthetics or individual rooms, have been tampered with by readily available GenAI tools.

Against this backdrop, our residential section this month examines the national investor market, a sector that represents a significant share of Australia’s housing stock and remains a vital pillar of rental supply. Activity across many centres remains robust, but the combination of factors outlined above creates a more complex operating environment than investors have faced in some time. Our teams across the country provide the localised intelligence needed to navigate the challenges.

On the commercial front, our specialists turn the lens onto the retail sector, a market that has been quietly rebuilding momentum as consumers returned to physical shopping environments. That recovery now faces a fresh test, with higher household finance costs, persistent cost-of-living pressure, and broader economic uncertainty all weighing on discretionary spending. How this plays out across different retail asset classes and locations is a central theme in this month’s commercial analysis.

Our rural section delivers a detailed examination of the Australian horticulture sector — an industry forecast to reach $19 billion in production value in 2025-26, and one that continues to record strong export growth despite a challenging operating environment.

As always, the expertise of our national network provides the clearest window into how these macro forces are playing out at the local level. With valuers and analysts operating in every major market across the country, Herron Todd White remains uniquely positioned to deliver the independent, ground-level intelligence that smart property decisions demand. Please enjoy our March edition of Month in Review.

Peter Maloney
CEO