Australian Property Market Update March 2026

0:00I want you to take a second and uh just guess the most valuable asset class in Australia. Just right now off the top of

0:07

7 secondsyour head, what holds the absolute most wealth in the entire country?

0:12

12 secondsI feel like most people would immediately jump to the stock market for that one,

0:16

16 secondsright? Exactly. You might be thinking it’s the stock market because, you know,

0:19

19 secondswe hear about it every single day. All those massive mining conglomerates, the big banks, uh the tech unicorns. Oh, yeah. Or maybe superanuation.

0:27

27 secondsYes. that collective mandated pool of retirement savings for millions and millions of working Australians

0:34

34 secondscontinuously compounding over decades. I mean, that’s a huge pile of money. It is. Yeah.

0:39

39 secondsWell, it’s actually neither of those things. Yeah.

0:41

41 secondsThe answer by a massive margin is literally the roof over your head.

0:46

46 secondsIt really is. And it completely reframes how you look at the economy when you realize the uh the sheer scale of the residential property market.

0:53

53 secondsOh, totally. Because we spend endless hours analyzing global stock indices and commodity prices, but the true financial

1:00

1 minutegiant is just quietly sitting right out there in our suburbs, our apartment buildings, and our city streets.

1:06

1 minute, 6 secondsYeah, the numbers we have in front of us today are just staggering. According to the data, Australian residential real estate is worth a massive 12.5 trillion.

1:17

1 minute, 17 secondsTrillion with a T.

1:18

1 minute, 18 secondsTrillion. Let me put that 12.5 trillion into perspective for you. the entire Australian listed stock market that sits at about $3.8 trillion dollar.

1:28

1 minute, 28 secondsWow.

1:29

1 minute, 29 secondsRight. And all of the Australian superanuation combined, that’s roughly 4.5 trillion. So housing alone makes up uh 55.4%

1:37

1 minute, 37 secondsof all household wealth in this country.

1:39

1 minute, 39 secondsIt’s just wild. More than half of the country’s entire wealth is physically tied up in bricks, mortar, and land. I mean, it is the undeniable heavyweight

1:47

1 minute, 47 secondschampion of the Australian financial system. Yeah,

1:49

1 minute, 49 secondsnothing else even comes close to its footprint,

1:52

1 minute, 52 secondswhich is exactly why we’re digging into this today. So, welcome. You’re listening to a new deep dive. And today,

1:56

1 minute, 56 secondswe are tearing into the brand new monthly housing chart pack from Totality for March 2026. And since today is March 29th, 2026,

2:05

2 minutes, 5 secondsthis data gives us a really real time,

2:07

2 minutes, 7 secondscompletely unfiltered pulse on the country’s economic heartbeat. Exactly. Okay, so let’s unpack this.

2:12

2 minutes, 12 secondsThink of it this way. If the Australian economy was a literal house, residential real estate wouldn’t just be the roof keeping the rain out.

2:21

2 minutes, 21 secondsNo, definitely not.

2:22

2 minutes, 22 secondsIt would be the entire foundation, the loadbearing walls, the plumbing, and the furniture. When a 12.5 trillion

2:29

2 minutes, 29 secondsfoundation shifts even a fraction of an inch, absolutely everybody feels the tremors. Oh, absolutely. And right now, I mean,

2:36

2 minutes, 36 secondsthat foundation is actively shifting beneath our feet. What are the numbers showing? Well,

2:41

2 minutes, 41 secondslooking at the national annual growth trend from the totality data, housing values actually accelerated to a 9.9% growth rate in February.

2:50

2 minutes, 50 secondsWow, almost 10%.

2:51

2 minutes, 51 secondsYeah, that is the fastest 12-month pace of growth we’ve seen since all the way back in June 2022.

2:58

2 minutes, 58 secondsNearly 10% growth on a 12.5 trillion asset class in a single year.

3:03

3 minutes, 3 secondsThat’s I mean, that’s an incomprehensible amount of wealth and equity being generated out of thin air.

3:08

3 minutes, 8 secondsIt really is. But here’s where it gets really interesting for me. We keep hearing this phrase, you know, the Aussie housing boom thrown around in all the headlines, but when you actually

3:17

3 minutes, 17 secondslook closely at the numbers, totality is published. Calling it a national boom feels a bit deceptive, doesn’t it? It

3:24

3 minutes, 24 secondslooks less like a unified national movement and more like a seessaw that has just violently tipped to one side.

3:30

3 minutes, 30 secondsYeah, that’s a really good analogy. The defining feature of the market right now is this well, this twospeed dynamic. Okay, two-speed. Walk us through that.

3:39

3 minutes, 39 secondsYou simply cannot look at Australia as a single homogeneous housing market anymore. You have to split the country into two distinct camps. You’ve got the

3:47

3 minutes, 47 secondsmidsize capitals and then the giant mega cities, right? And the midsize capitals are the ones surging completely out of control. Like over the last 12 months,

3:55

3 minutes, 55 secondsPerth is up an incredible 22.0%. 22%. Yes, 22%. Brisbane is up 17.3%.

4:03

4 minutes, 3 secondsAdelaide is up 10.9%.

4:06

4 minutes, 6 secondsAll three of those cities just hit fresh all-time record highs. 22% in Perth. Let’s just pause on that. Yeah.

4:13

4 minutes, 13 secondsIf you own a medianpriced home there,

4:15

4 minutes, 15 secondsyour net worth just got a massive six-figure injection over the last 12 months for doing absolutely nothing but holding on to your house keys. Exactly. It’s life-changing money.

4:24

4 minutes, 24 secondsBut then on the other end of that seessaw, we have the heavyweights, right? Sydney and Melbourne.

4:29

4 minutes, 29 secondsYeah. And the Giants have really stalled out. I mean, Sydney grew 6.0% 0%

4:33

4 minutes, 33 secondsannually, which might sound somewhat healthy on the surface, but you got to look closer. Right.

4:38

4 minutes, 38 secondsExactly. If you zoom in on the last quarter, growth was exactly 0.0%. Wow. Zero.

4:45

4 minutes, 45 secondsIt has completely flatlined and is sitting just below its November 2025 record high. And Melbourne is a very similar story. It’s up 4.7% over the

4:54

4 minutes, 54 secondsyear, but also recording 0.0% growth over the last quarter. Really? Yeah. And it’s actually sitting 1.0% 0%

5:01

5 minutes, 1 secondbelow its previous peak from all the way back in March 2022.

5:05

5 minutes, 5 secondsSo if you’re in Sydney or Melbourne, the music has effectively stopped for the moment. The heavy end of the seessaw is sitting flat on the dirt pretty much.

5:13

5 minutes, 13 secondsBut if you’re in Perth or Brisbane,

5:14

5 minutes, 14 secondsyou’re launched high into the air. So what is the actual mechanism driving this massive disconnect? Like why are the smaller cities exploding while the biggest cities are just frozen?

5:23

5 minutes, 23 secondsWell, it all comes down to a really brutal localized squeeze on supply. Ah,

5:28

5 minutes, 28 secondssupply and demand always inventory levels. The actual physical number of homes available for someone to buy that dictates everything

5:36

5 minutes, 36 secondsin this market. Nationally, the total advertised inventory is down 14.1%

5:42

5 minutes, 42 secondscompared to the exact same time last year.

5:44

5 minutes, 44 secondsOkay, so for every 100 homes a buyer had to choose from last spring, 14 of them have just vanished into thin air,

5:51

5 minutes, 51 secondsgone. And that’s just the national average. When you look at those booming midsize cities, the supply shock is much much more severe.

5:59

5 minutes, 59 secondsHow severe are we talking? In places like Perth and Darwin,

6:02

6 minutes, 2 secondsadvertised supply has plummeted by more than 30%.

6:06

6 minutes, 6 secondsWait, more than a third of the market just disappeared. Yep. Think about the mechanics of that. You have a growing population,

6:12

6 minutes, 12 secondspersistent demand, and you suddenly remove a third of the available homes from the market. Yeah, that’s a recipe for chaos.

6:18

6 minutes, 18 secondsPrices don’t just walk upward in that environment. They sprint. Buyers are just panic buying whatever is left.

6:24

6 minutes, 24 secondsAnd we can see the physical evidence of that panic and how fast these homes are turning over. Oh, totally.

6:29

6 minutes, 29 secondsBecause the data shows that capital city homes are selling in a median of 28 days. That is 3 days faster than they

6:36

6 minutes, 36 secondswere selling a year ago. We’re talking less than a month from the moment a for sale sign goes into the front yard to the moment a contract is signed.

6:44

6 minutes, 44 secondsIt’s incredibly fast.

6:45

6 minutes, 45 secondsI imagine buyers in that environment have absolutely zero leverage when they’re making an offer. zero.

6:51

6 minutes, 51 secondsThe concept of negotiating a bargain is virtually non-existent right now. How do we actually measure that though?

6:57

6 minutes, 57 secondsWe track it through something called vendor discounts. So, when a seller lists a house for a certain price, the vendor discount is the percentage they

7:05

7 minutes, 5 secondsultimately drop that asking price to actually secure a sale. Okay, got it.

7:09

7 minutes, 9 secondsRight now, vendor discounts are holding incredibly tight at around 2.9% for the capital cities. So, if a house is listed for a million dollars, the seller is

7:18

7 minutes, 18 secondsbasically only willing to shave off about 29 grand. They’re barely budging at all.

7:22

7 minutes, 22 secondsSellers know they don’t have to budge. I mean, if the first buyer pushes too hard for a discount, there is a line of three

7:30

7 minutes, 30 secondsother buyers right behind them willing to pay full price because the inventory is just so severely depleted. So, if I’m a buyer looking at these numbers,

7:39

7 minutes, 39 secondsespecially in a place like Sydney or Melbourne where things are incredibly expensive, even if growth has paused, Yeah. or Perth where prices are jumping 22%.

7:48

7 minutes, 48 secondsAnd I have absolutely no negotiating power. Yeah.

7:51

7 minutes, 51 secondsMy natural instinct is going to be to compromise. I’m going to look for something cheaper,

7:55

7 minutes, 55 secondsyou know, smaller place, a worse location, a fixer upper.

7:58

7 minutes, 58 secondsSurely that’s what people are doing to survive this market.

8:00

8 minutesYou’re spot on. The data tells a very clear story of that exact compromise happening.

8:05

8 minutes, 5 secondsOkay. Okay, what does that look like in the numbers?

8:06

8 minutes, 6 secondsWell, when totality breaks the housing market down into quartiles. So, the cheapest 25% of homes, the middle 50%

8:13

8 minutes, 13 secondsand the most expensive 25%, we see a really stark contrast. Right?

8:17

8 minutes, 17 secondsRight now, the lower quartile of the market is showing substantially stronger growth. The absolute cheapest homes are up 11.5% annually. Meanwhile, the upper quartile, the premium and luxury homes,

8:29

8 minutes, 29 secondsis only up 6.6%. So, the cheapest homes are rising in price almost twice as fast as the luxury homes.

8:35

8 minutes, 35 secondsThat’s I mean, it’s a paradox. Everyone is hunting for affordability.

8:40

8 minutes, 40 secondsAnd by crowding into that lower end of the market to hunt for it, they’re aggressively driving the price of affordability up. Exactly. When a market gets this tight,

8:48

8 minutes, 48 secondsthe bottom rung of the property ladder always moves up faster than the top rungs. And when people inevitably get priced out of buying even those lower

8:56

8 minutes, 56 secondscortile homes, they are pushed entirely out of the purchasing pool and straight into the rental market, I assume.

9:02

9 minutes, 2 secondsYes, into the rental market. But the rental market isn’t a safe harbor either. It’s facing its own severe crisis right now. The national rental

9:10

9 minutes, 10 secondsvacancy rate is sitting at a nearrecord low of 1.5%. Let’s paint a picture of what a 1.5%

9:16

9 minutes, 16 secondsvacancy rate actually looks like in the real world for you listening. Because a balanced rental market where landlords and tenants have relatively equal

9:23

9 minutes, 23 secondsfooting is generally considered to be around 3%. Right. Yes. 3% is considered healthy.

9:28

9 minutes, 28 secondsSo at 1.5% you’re talking about dozens of desperate people showing up on a rainy Saturday morning to inspect a single mediocre two-bedroom apartment.

9:39

9 minutes, 39 secondsYou have people offering to pay 6 months of rent upfront just to get their application looked at.

9:44

9 minutes, 44 secondsIt’s brutal. And naturally that desperation drives the cost of renting up significantly. National rents are up 5.5% over the 12 months to February.

9:53

9 minutes, 53 secondsYeah, that hurts.

9:54

9 minutes, 54 secondsDoes. And this escalating pressure brings us to a really highly debated section of the totality report. They feature a chart of the month. And for

10:01

10 minutes, 1 secondMarch 2026, the chart tries to answer the classic dinner party question. Where is rent money actually dead money?

10:08

10 minutes, 8 secondsAh, yes. The age-old argument from every uncle at a barbecue. Don’t rent. You’re just paying off someone else’s mortgage. Buy anything you can.

10:16

10 minutes, 16 secondsOh, we’ve all heard it. But if house prices are at record highs and interest rates are up, is that old wisdom actually mathematically true right now?

10:23

10 minutes, 23 secondsWell, despite the rapid rise in rents we just discussed, the math shows it is still very hard to find locations where the monthly cost of buying is actually cheaper than the monthly cost of renting.

10:32

10 minutes, 32 secondsWait, really? Even with rent surging.

10:35

10 minutes, 35 secondsYeah. However, there are very specific pockets of opportunity if you are willing to look at units. So, apartments

10:42

10 minutes, 42 secondsand town houses rather than freestanding homes. Why units specifically? Because of localized supply mechanics.

10:49

10 minutes, 49 secondsIn certain areas, there was a historical surge in apartment construction. That localized over supply kept the value growth of those specific apartments,

10:58

10 minutes, 58 secondsmeaning their purchase prices stayed relatively flat. Okay, that makes sense.

11:01

11 minutes, 1 secondBut because the broader national rental crisis is so severe, the rent for those same apartments has continued to climb.

11:08

11 minutes, 8 secondsSo, the lines on the graph have effectively crossed. So, the purchase price was kept artificially low by a glut of construction, but the rental

11:15

11 minutes, 15 secondsprice was dragged upward by the sheer national desperation for a place to live.

11:20

11 minutes, 20 secondsThat dynamic is exactly why the totality chart shows it is currently cheaper to pay a mortgage on a unit than to pay rent in specific suburbs,

11:27

11 minutes, 27 secondslike where we’re talking about places like Fairfield and Auburn and New South Wales, Marurning and Port Phillip and Victoria and Perth City. If you are

11:36

11 minutes, 36 secondslooking strictly at units in those specific post codes, renting might indeed be dead money compared to the cost of servicing a mortgage.

11:45

11 minutes, 45 secondsBut wait, if that’s the reality for a unit in those specific spots, what about the great Australian dream? What about freestanding houses with a backyard?

11:55

11 minutes, 55 secondsThat is a completely different reality.

11:57

11 minutes, 57 secondsWhen it comes to houses, there is almost nowhere in the capital cities where paying a mortgage is cheaper than renting.

12:03

12 minutes, 3 secondsNowhere. Not a single capital city area showed freestanding houses being cheaper to pay down on a mortgage relative to current rental costs. The gap is still way too wide.

12:13

12 minutes, 13 secondsSo what does this all mean for you if you’re renting right now? Let’s look at the trap this creates if you’re a first-time buyer trying to enter the market. It’s tough. The traditionally affordable options,

12:21

12 minutes, 21 secondsthe starter homes in the lower cile are jumping in price by 11.5% a year.

12:27

12 minutes, 27 secondsRenting is becoming vastly more expensive, which eats into your ability to save a deposit. You are essentially trying to hit a target that is

12:34

12 minutes, 34 secondsaccelerating away from you faster than your savings account can physically grow.

12:39

12 minutes, 39 secondsIt’s an incredibly hostile environment for new entrance, which is why the demographic data on who is actually securing loans right now is so revealing.

12:47

12 minutes, 47 secondsLet’s talk about that. Are first home buyers just completely locked out?

12:51

12 minutes, 51 secondsNot entirely. First home buyers are certainly fighting hard to get in. Their lending is actually up 15.5% in value and they currently make up 29.6% 6% of all owner occupier lending.

13:02

13 minutes, 2 secondsOkay. I know there are government incentives like the 5% deposit guarantee scheme helping them get a foot in the door, but it sounds like their success rate would vary wildly depending on which side of that seesaw they live on.

13:12

13 minutes, 12 secondsOh, the regional disparity is massive.

13:15

13 minutes, 15 secondsFirst home buyers hold the largest share of the market in the Northern Territory,

13:18

13 minutes, 18 secondssitting at 38.1% primarily because it remains one of the more affordable markets relative to local incomes. Right. And on the flip side,

13:26

13 minutes, 26 secondsconversely, their smallest footprint is in New South Wales, where they make up just 27.0%

13:31

13 minutes, 31 secondsof the market. The sheer cost of entry in Sydney and its surrounds is creating a barrier that many simply cannot cross.

13:38

13 minutes, 38 secondsOkay, so if first home buyers are struggling to scale the wall in the major markets, and prices are still surging, we have to follow the money trail.

13:46

13 minutes, 46 secondsWe do.

13:47

13 minutes, 47 secondsWho actually has the capital to keep fueling this 12.5 trillion engine?

13:51

13 minutes, 51 secondsWell, the data points clearly to investors. They are driving a massive portion of this current demand. Over the course of 2025, the total value of

13:59

13 minutes, 59 secondsinvestor lending surged by an astonishing 31.8%.

14:03

14 minutes, 3 secondsSorry, 31.8% more money poured in from property investors in a single year.

14:08

14 minutes, 8 secondsYep. Investors now make up 39.7% of all lending in the country. To give you some historical context, the decade average for investor participation is 33.5%.

14:17

14 minutes, 17 secondsWow.

14:18

14 minutes, 18 secondsSo investor activity is running incredibly hot. And if we look back at New South Wales, where first home buyers are struggling, the most investors make up a massive 45.0% of the market.

14:27

14 minutes, 27 secondsThat’s wild. Nearly half of all the money being borrowed for housing in the country’s most populous state is for investment properties, not for homes that the buyer intends to live in.

14:37

14 minutes, 37 secondsExactly.

14:38

14 minutes, 38 secondsOkay, wait, hold on. This is the part of the Kotality Report that is genuinely breaking my brain right now. Let’s hear it.

14:43

14 minutes, 43 secondsLet’s look at the broader macroeconomic reality for a second. The Reserve Bank of Australia, the RBA, has been actively trying to cool the economy down.

14:52

14 minutes, 52 secondsYeah.

14:53

14 minutes, 53 secondsCan you walk us through what the RBA is doing with rates and what that means for the cost of borrowing this money?

14:58

14 minutes, 58 secondsSure. So, the RBA recently hiked the cash rate to 3.85% in February, right?

15:03

15 minutes, 3 secondsThat was their first actual increase since November 2023, and it was entirely driven by stubbornly high inflation figures and a very tight labor market.

15:12

15 minutes, 12 secondsOkay? And because the RBA raised the cash rate, the commercial banks passed those costs on. Right now, average variable mortgage rates are sitting at

15:19

15 minutes, 19 seconds5.51% for owner occupiers and an even higher 5.67% for investors. Money is becoming significantly more expensive to borrow.

15:28

15 minutes, 28 secondsRight? The cost of debt is nearing 6%.

15:31

15 minutes, 31 secondsAnd at the exact same time, because property values have shot up so fast,

15:35

15 minutes, 35 secondsthe actual percentage return you get from renting a place out is dropping.

15:40

15 minutes, 40 secondsI saw in the report that gross rental yields are actually easing down to 3.56% nationally.

15:46

15 minutes, 46 secondsYeah, the math on the surface looks totally counterintuitive. Nationally,

15:50

15 minutes, 50 secondsthe gross rental yield hasn’t been this low since September 2022. You have investors paying nearly 6% in interest

15:57

15 minutes, 57 secondsto the bank just to generate roughly 3.5% in rental income. So, why on earth are investors borrowing 31% more money

16:06

16 minutes, 6 secondsto buy properties when they’re mathematically guaranteed to lose money every single month on cash flow? Why buy an asset that cost you more to hold than it pays you an income?

16:15

16 minutes, 15 secondsIt’s all about capital growth. You’re looking at the fundamental psychology of the Australian property investor. They are entirely willing to absorb a negative cash flow,

16:24

16 minutes, 24 secondspaying hundreds or even thousands of dollars out of their own pocket every month.

16:27

16 minutes, 27 secondsExactly. just to cover the shortfall between the rent and the mortgage because they are fixated on that capital growth. Ah, they’re looking at that 9.9%

16:35

16 minutes, 35 secondsnational growth figure we talked about,

16:36

16 minutes, 36 secondsright? They see Perth up 22%, Brisbane up 17%. The mechanism is simple in their minds.

16:45

16 minutes, 45 secondsIf I lose $10,000 a year holding this property, but the property goes up in value by $80,000 in that same year, I am still vastly ahead.

16:55

16 minutes, 55 secondsIt’s all paper wealth.

16:56

16 minutes, 56 secondsExactly. They are heavily leveraging themselves, taking on incredibly expensive debt, relying on the

17:03

17 minutes, 3 secondshistorical precedent that the foundation of the Australian economy will continue to appreciate in value much, much faster than the cost of their debt.

17:12

17 minutes, 12 secondsThey’re essentially buying a very expensive monthly subscription ticket to ride the capital growth train. They don’t care about the monthly fee. They just care about where the train is going.

17:21

17 minutes, 21 secondsThat is a perfect way to put it. But surely somewhere up the chain, the financial regulators are looking at this mountain of debt being piled onto a negative cash flow strategy and getting a little nervous.

17:29

17 minutes, 29 secondsOh, the regulators are definitely nervous. We are seeing active intervention right now. APR, the Australian Credential Regulation Authority, which essentially acts as the

17:37

17 minutes, 37 secondswatchdog for the banking sector. They stepped in recently. What did they do?

17:41

17 minutes, 41 secondsStarting in February, APR implemented a strict 20% limit on high debt to income lending for new loans.

17:47

17 minutes, 47 secondsLet’s clearly define DTI for the listener. Debt to income. That’s essentially a measure of how overleveraged a borrower is relative to their paycheck. Right.

17:57

17 minutes, 57 secondsCorrect. And APR specifically targets loans with a DTI of six or higher. So if you earn $100,000 a year before tax, a

18:05

18 minutes, 5 secondshigh DTI loan is anything where you’re borrowing $600,000 or more. It is a highly leveraged position.

18:12

18 minutes, 12 secondsAnd Apure is stepping in because the banks were handing out too many of these massive loans.

18:16

18 minutes, 16 secondsYeah. The portion of these highly leveraged loans had crept up to 6.1% of all new lending. That was the highest portion since the June quarter of 2023.

18:26

18 minutes, 26 secondsAPR is essentially acting as a circuit breaker. Wow. Okay.

18:29

18 minutes, 29 secondsThey are forcing the banks to put speed bumps on that capital growth train we talked about. They want to ensure that in an environment where interest rates are at 3.85% and could potentially go even higher if inflation doesn’t coal,

18:40

18 minutes, 40 secondsbanks aren’t handing out massive So what does this all mean? When we pull it together, what we are looking at in

18:46

18 minutes, 46 secondsthis March 2026 totality data is a 12.5 trillion market defined by a fierce multi-directional tugofwar.

18:56

18 minutes, 56 secondsIt really is.

18:57

18 minutes, 57 secondsYou’ve got the seessaw of surging midsize cities like Perth and Brisbane pulling against the stalling mega cities like Sydney and Melbourne. You’ve got desperate renters lining up in the rain,

19:07

19 minutes, 7 secondschasing affordable units because the lower cortile homes are jumping in price by 11.5% and locking them out of the housing market. Yeah.

19:14

19 minutes, 14 secondsAnd you have heavily leveraged investors willingly bleeding cash to the banks,

19:18

19 minutes, 18 secondsabsorbing high interest rates and low yields just to claim nearly 40% of the entire lending market and ride that capital growth wave.

19:27

19 minutes, 27 secondsThe underlying mechanics of this market are incredibly strained. It is a market of extremes driven by a profound imbalance between the number of people

19:35

19 minutes, 35 secondswho need a place to live or invest and the actual physical number of properties available to them.

19:40

19 minutes, 40 secondsWhich brings us to the final and perhaps the most important piece of the puzzle. We’ve talked extensively about how a 14%

19:47

19 minutes, 47 secondsdrop in available supply is causing this massive surge in prices and buyer desperation today. But there’s a specific data point in the totality

19:55

19 minutes, 55 secondsreport that points to what the supply is going to look like tomorrow. And honestly, it’s chilling.

20:00

20 minutesIt is in the background of all this tight supply and soaring demand, dwelling approvals. So, the actual permits granted to build new homes recorded a 7.2% fall in January.

20:11

20 minutes, 11 secondsAnd the breakdown of that fall is where the real concern lies. That drop was driven by a massive sharp 21.0% plunge

20:19

20 minutes, 19 secondsin approvals for new units and apartments. It’s huge. And that wasn’t an isolated bad month.

20:23

20 minutes, 23 secondsIt followed a 32% decline in unit approvals back in December.

20:28

20 minutes, 28 secondsNow, building a home, especially a highdensity apartment complex, is not an overnight process. It takes years of planning, funding, and construction. So,

20:35

20 minutes, 35 secondsI wanted to leave you with this final thought to chew on long after this deep dive dense.

20:39

20 minutes, 39 secondsYeah. If we are currently living with a 1.5% rental vacancy rate and an active 14% drop in housing inventory right now,

20:46

20 minutes, 46 secondswhat exactly is going to happen to this market in 2 or 3 years when this massive plunge in new unit approvals means there is absolutely nothing left in the construction pipeline to build? It feels

20:55

20 minutes, 55 secondslike that $12.5 trillion foundation isn’t just shifting.

0:00So, the Reserve Bank just hiked rates again by uh 25 basis points here in February 2026, right?

0:07

7 secondsAnd I mean, inflation is just proving incredibly stubborn. The cost of living is absolutely crushing everyday households right now. Oh, entirely. It’s a huge squeeze.

0:16

16 secondsYeah. So, by all the laws of traditional economics, the Australian residential property market should be well, it should be in freef fall. High borrowing costs are supposed to act like gravity,

0:25

25 secondsright?

0:25

25 secondsYeah. Exactly. Pulling asset prices back down to earth,

0:28

28 secondsright? But instead, the market is breaking records. So today, we’re doing a deep dive into the comprehensive

0:35

35 secondsHerren Todd White month in review for February 2026. It’s a really fascinating report.

0:41

41 secondsIt really is. We want to figure out why the laws of financial physics have just completely stopped working for you, the listener, and what’s actually driving

0:49

49 secondsthis massive divergence in property wealth. Okay, let’s unpack this. Well,

0:54

54 secondswe’re basically seeing a complete decoupling of asset prices from standard borrowing constraints. It um it really forces a total rethink of how we measure

1:02

1 minute, 2 secondsmarket health because the old rules just don’t apply anymore.

1:05

1 minute, 5 secondsExactly. Looking at interest rates in a vacuum simply doesn’t work today. I mean, if you look at the national confidence score right now, it sits at a highly resilient 7.5 out of 10.

1:15

1 minute, 15 secondsWait, 7.5? Even with the rate hikes?

1:17

1 minute, 17 secondsYeah, exactly. 7.5 out of 10. That tells us buyers aren’t retreating. They’re adapting. And the true gravitydeying

1:24

1 minute, 24 secondsforce here is uh well, it’s a severe structural supply crunch, right?

1:29

1 minute, 29 secondsOverall, residential listings are sitting 20% below the 5-year average.

1:34

1 minute, 34 secondsWow. I mean, a 20% drop in available inventory is just staggering. It’s massive.

1:40

1 minute, 40 secondsThat’s a huge chunk of the board entirely missing. And it’s not just an issue of people refusing to sell their established homes, right? It’s a fundamental failure to build new ones.

1:49

1 minute, 49 secondsYeah, that’s the core of it.

1:50

1 minute, 50 secondsconstruction is running well below the national housing accords because um the accord aimed for what 1.2 million new well-located homes over five years,

1:59

1 minute, 59 secondsright? That was the target. But the data shows we are missing that mark by tens of thousands of dwellings annually. Tens of thousands.

2:06

2 minutes, 6 secondsYeah. This isn’t just, you know, a temporary blip caused by a bad quarter.

2:09

2 minutes, 9 secondsIt’s a structural deficit that’s completely baked into the foundation of the 2026 market. And I imagine that structural deficit is creating wildly

2:17

2 minutes, 17 secondsdifferent realities depending on where you look on the map.

2:20

2 minutes, 20 secondsOh, absolutely. The confidence divergence is stark. Like Western Australia is practically euphoric right now. Really? How high is it there?

2:26

2 minutes, 26 secondsThey’re boasting a confidence score of 8.9 out of 10. Wow. 8.9.

2:31

2 minutes, 31 secondsYeah. It’s fueled by resource sector strength and frankly relative affordability. Right.

2:36

2 minutes, 36 secondsBut meanwhile, Victoria is lagging heavily at a pessimistic 5.9. It’s a huge gap. Why is Victoria so low?

2:43

2 minutes, 43 secondsWell, they’re weighed down by higher state land taxes and um shifting investment capital. Investors are just moving their money elsewhere.

2:52

2 minutes, 52 secondsThat makes sense.

2:53

2 minutes, 53 secondsBut, you know, the most aggressive divergence isn’t actually happening between states. It’s happening between price brackets. Okay, tell me more about that.

3:00

3 minutesWell, lower value properties are experiencing rapid, really aggressive growth. They’re heavily outpacing the top end of the market. So, when I look

3:09

3 minutes, 9 secondsat that dynamic, it feels kind of like a game of musical chairs, right?

3:12

3 minutes, 12 secondsLike the music is getting faster and more stressful, but instead of taking away one chair, they just took away half of them. That’s a great way to put it.

3:20

3 minutes, 20 secondsAnd um a major catalyst for this hyper competition at the bottom seems to be the federal government’s 5% deposit

3:28

3 minutes, 28 secondsscheme, right? The one for dwellings under $1.5 million.

3:32

3 minutes, 32 secondsYes, exactly. That scheme is a huge driver. But I mean, we have to look critically at the mechanism here. If

3:39

3 minutes, 39 secondsthese government schemes aren’t actually putting shovels in the ground to create new supply, which they aren’t,

3:44

3 minutes, 44 secondsright, then aren’t they just pouring gasoline on the fire? Pretty much. Yeah.

3:48

3 minutes, 48 secondsBecause by giving buyers leveraged access to the market, it seems like we’re just artificially inflating the entrylevel price point, like we’re

3:56

3 minutes, 56 secondspitting first home buyers directly against investors who are just chasing rising rental yields.

4:01

4 minutes, 1 secondThe data strongly validates that exact concern. You see, the deposit scheme was designed as a bridge to home ownership, right?

4:08

4 minutes, 8 secondsBut in a supply starved market, it acts as a price floor. A price floor.

4:14

4 minutes, 14 secondsInteresting. Take Kellyville in Sydney’s Northwest as a prime example of how this plays out mathematically. Okay. What happened in Kellyville?

4:22

4 minutes, 22 secondsSo, the median house price there hit $1.85 million back in January 2024. Okay. 1.85 million.

4:29

4 minutes, 29 secondsFast forward to January 2026, and it’s still sitting at exactly 1.85 85 million.

4:34

4 minutes, 34 secondsWait, it hasn’t moved at all in two years.

4:36

4 minutes, 36 secondsNot a cent. It effectively hit a hard price ceiling because local families simply reached their maximum borrowing limit under the new higher interest rates.

4:46

4 minutes, 46 secondsThe banks mathematically will not lend them another dollar.

4:49

4 minutes, 49 secondsSo, Kellyville flatlines because the debt capacity of that specific demographic is just entirely exhausted. Precisely.

4:56

4 minutes, 56 secondsBut the demand hasn’t disappeared, has it? It just like compresses and moves down the pricing ladder.

5:01

5 minutes, 1 secondExactly the case. Buyers who are priced out of Kellyville look further west to more historically affordable areas. Places like Trigeear, right?

5:08

5 minutes, 8 secondsBecause Trigeear has a lower entry point, it falls neatly into the threshold for the 5% deposit scheme. And crucially, it fits into investor yield models, too.

5:17

5 minutes, 17 secondsSo, what does that do to the prices there?

5:19

5 minutes, 19 secondsConsequently, the median dwelling price in Triier jumped 11.3% in just 12 months. 11.3%.

5:27

5 minutes, 27 secondsAre you sure? in a single year. While Kellyville was completely flat.

5:32

5 minutes, 32 secondsExactly. You have owner occupiers and investors engaging in massive bidding wars over the exact same limited pool of stock.

5:40

5 minutes, 40 secondsMan, that’s brutal for the buyers.

5:42

5 minutes, 42 secondsIt is. And the inherent risk highlighted in the report is that when the deposit scheme eventually expires, or even if it’s just modified, Yeah.

5:50

5 minutes, 50 secondswe’re going to be left with a severely under supplied and highly overpriced lower market segment. one that’s holding debt that relies on sustained unnatural growth.

5:59

5 minutes, 59 secondsSo basically, if buyers are completely maxed out by borrowing caps in the traditional suburbs, their only option is to change the math, right?

6:07

6 minutes, 7 secondsThey have to find places where the anticipated capital growth will outpace their soaring borrowing costs. And right now, it seems like it’s a massive migration of capital.

6:15

6 minutes, 15 secondsBuyers are aggressively targeting the huge infrastructure pipeline,

6:19

6 minutes, 19 secondsspecifically in Queensland and New South Wales. Let’s talk about Queensland first. Yeah.

6:24

6 minutes, 24 secondsBecause the sheer scale of the Brisbane market right now is wild. Oh, Brisbane had a monumental 2025.

6:30

6 minutes, 30 secondsPrices surged 14.5% across the year. 14.5% for a whole city is unbelievable.

6:38

6 minutes, 38 secondsI mean, this is a city that the rest of the country historically viewed as the quote unquote affordable alternative to Sydney,

6:45

6 minutes, 45 secondsright? But it has fundamentally transformed. The median dwelling value in Brisbane is now sitting well over $1 million.

6:52

6 minutes, 52 secondsOver a million bucks. That psychological barrier has just been completely smashed entirely. And it’s not speculative growth either. That’s the key,

6:58

6 minutes, 58 secondsright? It’s underwritten by public spending.

7:00

7 minutesExactly. Brisbane surge is heavily driven by the $7.1 billion games venues infrastructure program leading into the 2032 Olympics.

7:09

7 minutes, 9 secondsRight. So, you’ve got the massive new 63,000 seat stadium at Victoria Park. Yep.

7:14

7 minutes, 14 secondsCoupled with the ongoing roll out of the Cross River Rail.

7:17

7 minutes, 17 secondsIt’s huge. The Herren Todd White report specifically points to suburbs like Bowen Hills, which are sitting right on these infrastructure nodes. What’s happening in Bowen Hills?

7:25

7 minutes, 25 secondsWell, a standard three-bedroom house there recently sold for 1.35 million. A standard threebed for 1.35.

7:32

7 minutes, 32 secondsThat’s incredible. And we’re seeing the exact same playbook in Sydney, aren’t we?

7:36

7 minutes, 36 secondsOh, absolutely. The Western Sydney International Airport, which is finally due to open this year in 2026. Finally,

7:43

7 minutes, 43 secondsright alongside the new St. Mary’s Metro Station. It’s completely rewriting the economic geography of the West

7:50

7 minutes, 50 secondsbecause infrastructure at this scale, it isn’t just about, you know, the convenience of a shorter commute. It turns dormant patches of dirt into active economic hubs.

7:59

7 minutes, 59 secondsIt does. But if we connect this to the bigger picture, there’s a severe systemic double-edged sword to this boom.

8:07

8 minutes, 7 secondsOkay. What’s the catch? Well, if we look at the mechanics of the construction industry right now, this massive pipeline of Olympic and civil

8:14

8 minutes, 14 secondsinfrastructure is cannibalizing the residential sector.

8:17

8 minutes, 17 secondsOh, wow. Cannibalizing it. Yeah. State funded mega projects operate on entirely different budgets. They offer higher profit margins, better union conditions,

8:27

8 minutes, 27 secondsand longer term job security. So, all the workers are going there.

8:30

8 minutes, 30 secondsExactly. They are dragging all the available skilled labor brick layers,

8:36

8 minutes, 36 secondselectricians, steel workers away from residential building sites.

8:39

8 minutes, 39 secondsWait, so the very solution intended to support a growing population is actively starving the housing market of the labor required to shelter that population.

8:49

8 minutes, 49 secondsYes, it is a brutal catch22. That’s insane.

8:53

8 minutes, 53 secondsState projects are out bidding local residential developers for the exact same materials and crews. It’s driving up construction costs to the point where residential builders go bankrupt,

9:02

9 minutes, 2 secondswhich loops right back around to worsen the severe supply shortage we started this whole conversation with. Exactly,

9:08

9 minutes, 8 secondsman. So, since traditional detached homes are becoming too expensive to buy and functionally too hard to build due to these labor deficits, the actual

9:17

9 minutes, 17 secondsphysical shape of how we live is being forced to adapt. Yes, the market will always find a workaround when faced with

9:23

9 minutes, 23 secondsa structural roadblock, but um those workarounds frequently challenge our traditional assumptions which perfectly frames the absolute death of the office terzi dream.

9:33

9 minutes, 33 secondsOh yes, the great myth.

9:35

9 minutes, 35 secondsYeah. Going back to the pandemic, the prevailing narrative was incredibly optimistic. Right. We have all these empty commercial skyscrapers in the

9:43

9 minutes, 43 secondsMelbourne CBD, so let’s just convert them into apartments and solve the housing crisis overnight. It sounded so elegant, didn’t it?

9:51

9 minutes, 51 secondsIt did. And environmentally friendly.

9:54

9 minutes, 54 secondsYeah. Yet, the reality in this 2026 report is just staggering. It really is.

9:59

9 minutes, 59 secondsZero. Literally zero applications have been submitted by developers to repurpose office towers into housing in central Melbourne since 2023.

10:07

10 minutes, 7 secondsNot a single one. And the reason is that the narrative completely ignored the engineering reality. Right?

10:13

10 minutes, 13 secondsThe reason those applications are at zero is purely financial. The mechanics of retrofitting a commercial tower are a nightmare. Like plumbing and stuff.

10:20

10 minutes, 20 secondsYeah. You’re dealing with central core plumbing, communal HVAC systems, and floor plates that were never designed

10:28

10 minutes, 28 secondsfor individual residential acoustic separation or even natural light requirements.

10:33

10 minutes, 33 secondsOh, right. You can’t just put a bedroom in the middle of a massive dark flare plate.

10:37

10 minutes, 37 secondsExactly. the fit out costs to rip that apart and install individual plumbing,

10:42

10 minutes, 42 secondselectrical metering, and ventilation for hundreds of separate apartments. It’s simply too exorbitant. Wow.

10:48

10 minutes, 48 secondsThe math does not and likely will not stack up for developers.

10:52

10 minutes, 52 secondsSo, if the empty skyscraper fantasy is totally dead, the market has clearly pivoted to a completely different model.

10:58

10 minutes, 58 secondsAnd this is where the institutionalization of the Australian housing market becomes undeniable, I think.

11:03

11 minutes, 3 secondsOh, definitely. Because instead of converting old offices, Melbourne is experiencing a massive surge in build to rent or BTR.

11:10

11 minutes, 10 secondsYes, BTR is huge right now.

11:12

11 minutes, 12 secondsThe report highlights a 326 apartment complex currently under construction in Cobberg. But this isn’t just like a standard block of flash.

11:20

11 minutes, 20 secondsThis is far from it. They’re heavily amenitizing the product,

11:23

11 minutes, 23 secondsoffering integrated yoga studios, pet spas, 247 concieres.

11:28

11 minutes, 28 secondsAnd crucially, they’re offering secure leases ranging from 3 to 5 years.

11:32

11 minutes, 32 secondsRight. It’s fundamentally shifting housing from being a raw individually owned asset to being consumed almost

11:40

11 minutes, 40 secondslike a highly curated Netflix subscription service.

11:44

11 minutes, 44 secondsThat’s a great analogy. And the institutional capital entering the residential space completely changes the power dynamic here. How so?

11:51

11 minutes, 51 secondsThis BTR movement is a profound threat to the traditional mom and pop investor. Oh, I bet.

11:56

11 minutes, 56 secondsYeah. An individual landlord cannot compete with a corporate entity that possesses the capital to operate communal amenities at a loss just to capture long-term market share.

12:05

12 minutes, 5 secondsWow. Yeah. They can just outspend them.

12:07

12 minutes, 7 secondsExactly. Furthermore, it reflects a rapidly maturing renter and buyer base.

12:11

12 minutes, 11 secondsThe consumer in 2026 is highly educated on the value of space.

12:15

12 minutes, 15 secondsOkay. What do you mean by that? Well, if you look at that same Melbourne CBD, the data shows that tiny studio apartments,

12:21

12 minutes, 21 secondsyou know, those under 45 square meters without dedicated parking, they are severely lagging in capital appreciation. Really? Even with the housing shortage?

12:29

12 minutes, 29 secondsYes. Despite offering seemingly lucrative rental yields of around 8.4%. That’s fascinating. You look at an 8.4%

12:37

12 minutes, 37 secondsyield on a tiny CBD studio, and you might assume it’s an absolute gold mine.

12:42

12 minutes, 42 secondsYou’d think so. But if capital appreciation is dead on those micro apartments, you’re basically just buying a highly taxed income stream, not a growing asset.

12:51

12 minutes, 51 secondsExactly.

12:52

12 minutes, 52 secondsBuyers and renters must be demanding actual square footage now because honestly, the remote work era permanently broke our tolerance for living in a shoe box.

13:01

13 minutes, 1 secondYou hit the nail on the head. The psychology has permanently shifted. If a floor plan does not include functional separated space, like at least a

13:09

13 minutes, 9 secondsdedicated study, nuke owner occupiers simply will not bid on it. Makes sense.

13:14

13 minutes, 14 secondsAnd the demand for space is so acute that while Melbourne goes vertical with these corporate BTR models, Queensland is tackling the supply and space issue right in the backyard.

13:23

13 minutes, 23 secondsAh, yes, the granny flat boom. It is such a fascinating regulatory workaround. According to the report,

13:31

13 minutes, 31 secondseveryday investors in Queensland are dropping up to $300,000 to build 80 square meter detached dwellings in their existing backyards.

13:39

13 minutes, 39 secondsIt’s incredible. State and local council regulations evolved to allow property owners to lease these secondary dwellings.