Australian Property Market Update May 2026

0:00You know, when you think about uh the engine of a car, you picture this singular massive piece of machinery

0:08

8 secondsdoing all the heavy lifting. Like if the engine stops, the car stops. Right.

0:11

11 secondsRight. Yeah. The whole system basically just falls apart without it.

0:14

14 secondsExactly. And when you look at the Australian economy, I mean, you might assume that engine is the mining sector or uh maybe the big banks.

0:22

22 secondsSure. Yeah. That’s what a lot of people think.

0:24

24 secondsBut the data tells a completely different story. The true engine, the thing actually driving the wealth of the nation is housing. And we are not

0:32

32 secondstalking about like a small quiet motor here. Oh, not at all.

0:36

36 secondsWe’re talking about an absolute behemoth. Get this. Residential real estate in Australia is currently worth $12.6 trillion.

0:45

45 secondsThat’s trillion with a T.

0:48

48 secondsIt’s just uh the sheer scale of that is difficult to even wrap your head around until you put it next to something else.

0:53

53 secondsIt really is like to put that in perspective. Every single dollar in Australian’s superanuation, so all the retirement savings combined is roughly

1:01

1 minute, 1 second4.5 trillion. Yeah. And all listed stocks combined on the ASX, just 3.6

1:08

1 minute, 8 secondstrillion. So housing makes up uh 55.8% of total household wealth, which is just staggering when you really think about it.

1:16

1 minute, 16 secondsIt is. It isn’t just a sector of the economy. In many ways, it literally is the economy. So today we are cutting through the noisy headlines to figure

1:25

1 minute, 25 secondsout exactly what is happening to this massive engine.

1:28

1 minute, 28 secondsYeah, because there’s a lot of noise out there right now.

1:30

1 minute, 30 secondsThere really is. We’ve got our hands on the newly releasleased totality monthly housing chart pack for May 2026 and

1:37

1 minute, 37 secondswe’re going to explore what these changing dynamics actually mean for you exactly whether you are, you know, desperately trying to buy your first place, looking

1:45

1 minute, 45 secondsto sell, or just trying to understand why your grocery bill is tied to interest rates. because right now the dashboard for this economic engine is

1:53

1 minute, 53 secondsflashing some very confusing warning lights. Okay, let’s unpack this.

1:58

1 minute, 58 secondsLet’s do it. And you know, a lot of that confusion comes from how we’ve traditionally been taught to talk about real estate. We constantly hear politicians and commentators discuss the

2:06

2 minutes, 6 secondsAustralian property market, right? Like it’s one single thing.

2:09

2 minutes, 9 secondsExactly. As if it’s one giant monolith that moves up and down perfectly in sync across the whole country, which uh looking at this May 2026 data

2:18

2 minutes, 18 secondsis just a complete illusion. I mean, the headline figure here says national home values grew by 1.6% over the last 3 months.

2:26

2 minutes, 26 secondsYeah. Which makes it the softest quarter we’ve seen since uh April 2025, right? And the annual trend has dropped down to 9.8%. So, if you just read the

2:36

2 minutes, 36 secondssummary, you’d think the whole country is just quietly tapping the brakes.

2:39

2 minutes, 39 secondsBut then you look at the city by city breakdown and that national average becomes totally meaningless.

2:45

2 minutes, 45 secondsCompletely. Like if I’m sitting in Perth right now, this data reads like an absolute gold rush. But if I’m in Melbourne, it feels like a total bust. I

2:53

2 minutes, 53 secondsmean, is it even useful to look at a national average anymore when the experiences are so violently different?

2:59

2 minutes, 59 secondsHonestly, no. What’s fascinating here is that we have to completely discard the idea of a national market. We are now

3:06

3 minutes, 6 secondsfully entrenched in a multi-speed market. The gap between the best performing and worst performing cities is just staggering. Right now we are

3:15

3 minutes, 15 secondslooking at a 24 percentage point gap in annual growth.

3:18

3 minutes, 18 secondsThat’s insane because Perth is up what was it? An incredible 26% annually.

3:24

3 minutes, 24 secondsYeah, 26%. It’s smashing record highs month after month. That is a completely different universe.

3:30

3 minutes, 30 secondsIt really is. Meanwhile, Melbourne is up just 2% for the entire year and actually went backwards by6% this past quarter.

3:38

3 minutes, 38 secondsWent backwards. Wow.

3:40

3 minutes, 40 secondsYeah. values there are now sitting 2.3% below their previous record high. Sydney is also seeing quarterly drops down about.9%.

3:49

3 minutes, 49 secondsSo the big guys are stalling.

3:51

3 minutes, 51 secondsExactly. The major eastern capitals are transitioning to much softer conditions while the midsize capitals are just absolutely booming.

3:58

3 minutes, 58 secondsOkay. So if prices are stalling out or even dropping in those massive eastern cities, the balance of power has to be shifting on the ground, right?

4:05

4 minutes, 5 secondsOh, significantly. Like if I’m selling a house in Sydney right now, I can’t just, you know, cross my arms, ask for a million dollars over reserve, and expect a fist fight on my front lawn anymore.

4:15

4 minutes, 15 secondsNo, those days are firmly in the rearview mirror. The primary indicator we use to measure that shift in power is the flow of new listings.

4:24

4 minutes, 24 secondsOkay, the new stuff hitting the market, right? When we look at the data, the volume of new properties hitting the market jumped 22.4% compared to this time last year.

4:34

4 minutes, 34 secondsThat’s a huge jump. It is. At the same time, the percentage of homes successfully selling at auction, the clearance rate has tumbled. It peaked at

4:43

4 minutes, 43 seconds72% late last year and is now consistently dragging below 60%.

4:48

4 minutes, 48 secondsSo, sellers are having to adjust their expectations. I saw the median discount on initial asking prices is sitting at -3.1%.

4:56

4 minutes, 56 secondsYes, sellers are absolutely having to negotiate more.

4:58

4 minutes, 58 secondsIt feels like a game of musical chairs, but suddenly someone threw a whole bunch of extra chairs into the room. Sellers can’t just name their price anymore.

5:06

5 minutes, 6 secondsI like that analogy, but we need to uh add a bit of nuance to get the full picture. It’s not just that extra chairs were thrown into the room. Yes, brand

5:13

5 minutes, 13 secondsnew listings have spiked partially because of a flurry of long weekends recently.

5:17

5 minutes, 17 secondsRight. Everyone listing after Easter, whatever.

5:19

5 minutes, 19 secondsExactly. But total stock is still nearly 10% below the 5-year average. We aren’t actually drowning in an unprecedented overupp of houses.

5:28

5 minutes, 28 secondsWait, really? So, if there isn’t a massive overupp, why is the power shifting?

5:33

5 minutes, 33 secondsWhat’s actually happening is that homes are simply taking longer to sell. Recently, buyers are taking their time. Oh, I see.

5:41

5 minutes, 41 secondsBecause homes are sitting on the shelf longer. The total advertised stock levels are seeing upward pressure. They just pile up a bit. So, the FOMO is gone.

5:50

5 minutes, 50 secondsSpot on. Okay. Okay, so if you are a buyer listening to this and you are operating in one of these cooling markets, your ability to negotiate is literally the best it has been in a year.

5:59

5 minutes, 59 secondsOkay, so buyers finally have a bit of breathing room. But uh this leads to something in the report that completely threw me. What’s that?

6:06

6 minutes, 6 secondsWell, with more stock hitting the market and prices cooling in major cities, who’s actually brave enough to buy right now? You would think people would be sitting on their hands.

6:14

6 minutes, 14 secondsYou would think so. Yeah. But the data shows this massive tugof-war happening between two very specific groups. First home buyers and investors.

6:23

6 minutes, 23 secondsIt’s a really surprising dynamic. First home buyer lending surged over Q4, up 15.5% by value,

6:31

6 minutes, 31 secondsmaking up almost 30% of owner occupier lending and heavily concentrated in places like the Northern Territory, right, where it’s like 38.1%.

6:40

6 minutes, 40 secondsExactly. They are very active.

6:42

6 minutes, 42 secondsMeanwhile, investors are piling in just as hard. Investor lending is up 23.6% over the year, making up nearly 40% of all new lending.

6:50

6 minutes, 50 secondsWait, I need you to explain the logic here. If the market is cooling and homes are getting harder to sell, why are investors pouring 23% more money into it?

6:59

6 minutes, 59 secondsIt does seem strange at first glance.

7:01

7 minutes, 1 secondIt seems totally counterintuitive. What do they know that we don’t?

7:04

7 minutes, 4 secondsWell, it comes down to the brutal reality of the rental market. Rents have reacelerated. They’re growing at 5.7% annually, which is just punishing for renters.

7:13

7 minutes, 13 secondsIt really is. And vacancy rates are a microscopic 1.7%. There is virtually nowhere to rent.

7:19

7 minutes, 19 secondsSo investors are just capitalizing on that desperation.

7:22

7 minutes, 22 secondsBasically, yes. Because rents are rising while property prices are cooling off or staying flat. Gross rental yields are creeping up. Ah, the yield.

7:29

7 minutes, 29 secondsYeah. Nationally, gross yields are at 3.59%.

7:34

7 minutes, 34 secondsAnd somewhere like Darwin is hitting an impressive 6.0%.

7:38

7 minutes, 38 secondsRight. So they aren’t even looking at the house price going up.

7:40

7 minutes, 40 secondsExactly. Investors aren’t necessarily chasing capital growth right now. They are chasing that sweet rental yield. They want the cash flow.

7:48

7 minutes, 48 secondsOkay. But both of these groups, the first home buyers and the investors, they are borrowing heavily to do this.

7:54

7 minutes, 54 secondsThey absolutely are taking on a lot of debt.

7:56

7 minutes, 56 secondsBut the cost of that borrowing just got a massive reality check, which kind of explains the broader market slowdown we talked about earlier.

8:03

8 minutes, 3 secondsAnd headwinds are very real right now.

8:05

8 minutes, 5 secondsYeah. Because the RBA, the Reserve Bank, has hiked the cash rate for the third time in 2026, bringing it to 4.35%.

8:14

8 minutes, 14 secondsCompletely erases three rate cuts we saw in 2025. We are right back up there.

8:19

8 minutes, 19 secondsIt’s brutal. And adding to the pain, AP introduced a new macro credential policy on Feb 1st. They put a 20% limit on high debt to income lending.

8:29

8 minutes, 29 secondsRight? So loans that are more than six times a borrower’s income.

8:32

8 minutes, 32 secondsSo what does this all mean? It feels like buyers are stepping on the gas pedal with government deposit schemes and stuff, but at the exact same time,

8:41

8 minutes, 41 secondsthe RBA and AP are aggressively slamming on the emergency break.

8:46

8 minutes, 46 secondsThat is a very accurate way to look at it. And this raises an important question about serviceability and the erosion of household balance sheets.

8:53

8 minutes, 53 secondsLike how much pain can people actually take?

8:55

8 minutes, 55 secondsExactly. But we have to look at why the RBA is doing this. We still have stubbornly tight labor markets and sticky inflation. They are trying to cool the whole economy down.

9:05

9 minutes, 5 secondsAnd APR is just trying to stop people from taking on insane amounts of debt.

9:09

9 minutes, 9 secondsYes. Before AP stepped in, high-risisk lending had been subtly rising again.

9:14

9 minutes, 14 secondsPeople were stretching too far, trying to chase those high prices.

9:17

9 minutes, 17 secondsRight. The regulators are actively trying to put a leash on the market, which means average mortgage rates, which were sitting around 5.5% for variable owner occupiers back in January, are only going to climb.

9:28

9 minutes, 28 secondsWow. So borrowing gets harder and more expensive.

9:31

9 minutes, 31 secondsExactly. So, if I’m listening to this right now, with interest rates erasing all recent cuts and prices softening in the major capitals, I might be fearing a total market crash.

9:41

9 minutes, 41 secondsThe very common fear when you see these factors lining up.

9:44

9 minutes, 44 secondsYeah, I mean, it sounds like a recipe for disaster. But what does history actually tell us about Australian property downturns? Because we have data on this.

9:53

9 minutes, 53 secondsWe do. And if we look at the chart of the month in the report, it maps out the last 40 years of combined capital values. 40 years of data. What does it show?

10:03

10 minutes, 3 secondsIt shows that there have only been 10 specific downturns over the last four decades where values fell for at least three consecutive months.

10:10

10 minutes, 10 secondsOkay, 10 and 40 years. That doesn’t sound too bad.

10:13

10 minutes, 13 secondsIt’s really not. The worst recently was between 2017 and 2019 where values fell 8.2% over 19 months.

10:20

10 minutes, 20 secondsAnd the pandemic one, right? 2022 to 2023, values dropped 8.1% over 9 months.

10:26

10 minutes, 26 secondsHere’s where it gets really interesting to me. When you look at a 40-year chart, an 8% drop after a massive multi-year

10:34

10 minutes, 34 secondsboom, it doesn’t sound like the financial apocalypse the news makes it out to be. It really doesn’t contextually.

10:40

10 minutes, 40 secondsDo we just panic too easily? Like, stock markets drop 8% all the time and nobody cares.

10:45

10 minutes, 45 secondsWell, the difference is leverage. A downturn hurts highly leveraged recent buyers immensely. If you only put down a

10:53

10 minutes, 53 seconds10% deposit, an 8% drop wipes out almost all your actual equity.

10:58

10 minutes, 58 secondsOh, right. Because you still owe the bank the full amount, that is terrifying.

11:03

11 minutes, 3 secondsIt is scary for the individual. But the historical context shows incredible resilience in the Australian housing market as a whole. So, the system itself doesn’t break.

11:12

11 minutes, 12 secondsNo. Declines are usually contained to single digits and they recover relatively quickly once credit conditions ease.

11:18

11 minutes, 18 secondsSo, a catastrophic crash is highly unlikely. It’s more of a a managed deflation.

11:23

11 minutes, 23 secondsExactly. The regulators want to take the heat out, not burn the house down.

11:27

11 minutes, 27 secondsWell, that is somewhat reassuring, I guess. All right, let’s wrap this up. We started with the mission of understanding what is happening to the

11:35

11 minutes, 35 secondsengine of Australian wealth, and we’ve covered a lot of ground.

11:38

11 minutes, 38 secondsWe really have. We’ve mapped out the multi-speed market, showing how national averages are useless right now. We uncovered the shifting dynamics between

11:47

11 minutes, 47 secondsbuyers and sellers where buyers finally have a bit of leverage.

11:51

11 minutes, 51 secondsAnd we looked at how the RBA and AP are deliberately cooling the landscape with rate hikes and lending limits.

11:59

11 minutes, 59 secondsExactly. And keeping an eye on this data is absolutely vital because as we said at the start, it literally represents over half of your household wealth.

12:08

12 minutes, 8 secondsIt dictates the financial weather for everyone.

12:10

12 minutes, 10 secondsIt really does. But I want to leave you with a final provocative thought, something to sort of mull over on your own. Oh, I like where this is going.

12:17

12 minutes, 17 secondsWell, we talked about how first home buyers are surging right now, right? And that is largely thanks to government 5% deposit guarantees, right? Which is essentially pumping money in demand into the market.

12:27

12 minutes, 27 secondsExactly. But at the exact same time, the RBA and AP are desperately trying to pull money out of the market to fight inflation.

12:35

12 minutes, 35 secondsIt’s a massive contradiction.

12:37

12 minutes, 37 secondsIt is. Are different arms of the government basically fighting a tugofwar against each other? One pushing up, one pulling down.

12:44

12 minutes, 44 secondsYeah. And if so, is the average citizen just getting caught in the crossfire of this massive institutional tugofwar? It

12:52

12 minutes, 52 secondsis something to think about the next time you look at housing policies.

12:55

12 minutes, 55 secondsThanks for joining us for

0:00right now. Um, borrowing money is the most expensive it has been in years. Yeah, absolutely.

0:05

5 secondsI mean, by all traditional logic, the property market should just be an absolute ghost town. It really should.

0:11

11 secondsYet somehow, you’ve got these firsttime home buyers actively pushing entry-level houses to like new record highs. And at

0:19

19 secondsthe exact same time, you have these massive corporate landlords practically begging companies to take their office space for free.

0:26

26 secondsRight? The old map of cause and effect is just it’s completely broken. And today we’re figuring out why.

0:33

33 secondsYeah. It’s a it’s a complete decoupling of the traditional economic rules. Yeah.

0:37

37 secondsAnd the mechanics behind it are just incredibly revealing.

0:41

41 secondsWell, welcome to the deep dive. Our mission for you today is to decode the current honestly highly chaotic state of the Australian property market.

0:49

49 secondsVery chaotic. We are pulling our insights from the Heron Todd White or HTW month and review report for April 2026. And our goal here is to just cut

0:58

58 secondsthrough all the endless noise you’re hearing about interest rates and you know global conflicts. We want to figure out the actual mechanics of what is

1:06

1 minute, 6 secondshappening to the physical spaces where you live and work.

1:08

1 minute, 8 secondsAnd looking at this data from where we sit right now in uh late May 2026, yeah, I mean the timing really couldn’t be

1:17

1 minute, 17 secondsbetter. No, the macroeconomic weather system is just incredibly volatile right now. The RBA’s already lifted the cash rate twice this year, right? Up to 4.1%.

1:26

1 minute, 26 secondsYeah, 4.1%. But the thing is, it wasn’t this unified march upward. That March decision, it saw a 5 to4 vote,

1:34

1 minute, 34 secondswhich is incredibly rare. I mean, a 5 to4 split means a single board member having like a slightly different morning coffee could have changed the entire monetary trajectory of the country.

1:45

1 minute, 45 secondsLiteral that signals absolute internal paralysis about how far this tightening cycle actually needs to go.

1:51

1 minute, 51 secondsRight. Again, the bond markets, they read that paralysis instantly. Mhm.

1:55

1 minute, 55 secondsBecause the core issue they’re all wrestling with is that inflation is just stuck. Yeah. The headline rate is sitting at 4.6%.

2:02

2 minutes, 2 secondsWhich is far above the target band.

2:04

2 minutes, 4 secondsExactly. And what’s fascinating here is that we aren’t just dealing with domestic spending habits anymore. What do you mean?

2:10

2 minutes, 10 secondsWell, the geopolitical landscape is actively rewriting our local construction costs. We have these ongoing global trade tensions,

2:17

2 minutes, 17 secondsspecifically the the conflict involving Iran, which is causing global fuel costs to spike, right?

2:23

2 minutes, 23 secondsAnd that doesn’t just hurt when you, you know, fill up your car. The cost to put like a sheet of plywood on a diesel truck and move it across a country that skyrockets.

2:31

2 minutes, 31 secondsOh, wow. Yeah.

2:32

2 minutes, 32 secondsAnd that bleeds directly into logistics, construction materials, and ultimately consumer confidence.

2:38

2 minutes, 38 secondsWhich perfectly brings us to the central premise of this deep dive. In a world of sticky 4.6% 6% inflation and the looming

2:46

2 minutes, 46 secondsthreat of maybe another rate hike to 4.35%. The property market isn’t crashing. No, not at all.

2:52

2 minutes, 52 secondsIt’s fracturing. It has split into this bizarre twospeed reality. Some sectors are totally frozen while others are hitting numbers we have just never seen before.

3:00

3 minutesYeah. And to really grasp the mechanics of this fracture, we we need to start at the very top, the prestige residential sector. Because counterintuitively

3:09

3 minutes, 9 secondsthe ultra wealthy end of the market acts as the most sensitive immediate barometer for broader economic confidence.

3:16

3 minutes, 16 secondsOkay, let’s look at the HTW prestige index then which scores the market out of 100. The national average is sitting

3:23

3 minutes, 23 secondsat a very tepid 62 out of 100, right?

3:26

3 minutes, 26 secondsWhich looks stable. But here’s where it gets really interesting. Underneath that average, there is this massive

3:33

3 minutes, 33 secondsgeographical split. Sydney and Melbourne are officially labeled as soft, sitting at 45 out of 100.

3:40

3 minutes, 40 secondsYeah. Which means the mid to upper segments in those southern capital, so we’re talking the 2.5 million to $5 million range. Those are just stalling out.

3:48

3 minutes, 48 secondsReally stalling completely pretty much. These are usually your second or third time upgraders. They have equity, right?

3:53

3 minutes, 53 secondsBut they also have very complex portfolios. Oh, okay.

3:56

3 minutes, 56 secondsSo they look at the RBA’s internal divisions. They look at the Middle East and they aggressively price that global anxiety into their offers. They demand

4:04

4 minutes, 4 secondsthese heavy negotiations and extended settlement times probably.

4:08

4 minutes, 8 secondsExactly. But then, and this is the crazy part, you fly over to Adelaide and the index jumps to 80 out of 100. Wow.

4:14

4 minutes, 14 secondsFirmly in hot territory. And Perth and Brisbane are sitting at 70, which is a very solid warm.

4:21

4 minutes, 21 secondsIt’s like the national property market is this massive cargo ship hitting a sudden storm. It’s not sinking, but the watertight compartments are holding up completely differently.

4:30

4 minutes, 30 secondsThat’s a great way to put it. I mean, Sydney is taking on water while Adelaide is somehow cruising in the sunshine. Why is Sydney stalling while Adelaide essentially ignores the RBA?

4:41

4 minutes, 41 secondsIt really comes down to a structural battle between scarcity and sentiment.

4:46

4 minutes, 46 secondsIn Adelaide, you have this chronically low stock. It’s a severe lack of supply combined with a very deep pool of buyers,

4:54

4 minutes, 54 secondsright? And when scarcity hits that kind of extreme level, wealthy buyers know that if they don’t secure the premium property right in front of them, another

5:02

5 minutes, 2 secondscomparable home might not hit the market for like 18 months.

5:05

5 minutes, 5 secondsSo scarcity just overrides the cost of debt. Exactly. And we are still seeing absolutely jaw-dropping individual numbers even in the softer markets. I

5:13

5 minutes, 13 secondsmean, the report highlights a $25 million sale in Belleview Hill in Sydney, right? and a $ 14.5 million

5:21

5 minutes, 21 secondsrecord-breaking riverfront property in Yuranga up in Brisbane.

5:27

5 minutes, 27 secondsBut they aren’t just buying the land, are they?

5:30

5 minutes, 30 secondsNo. No. And this is a really crucial mechanism to understand right now.

5:34

5 minutes, 34 secondsThat Bellevier Hill property, it’s this massive three-story home, fully automated, Wolf appliances, marble, everything.

5:42

5 minutes, 42 secondsSounds nice. Oh, it’s beautiful.

5:44

5 minutes, 44 secondsBut its most valuable feature is that it is completely turnkey. It is finished.

5:48

5 minutes, 48 secondsOkay, let’s unpack this because if you have $25 million to spend, you could easily buy a say $15 million unrenovated

5:55

5 minutes, 55 secondsmansion and to spend $5 million making it exactly how you want it, right?

5:59

5 minutes, 59 secondsWhy overpay for someone else’s finished product?

6:01

6 minutes, 1 secondBecause high netw worth individuals are currently buying time and certainty. Time.

6:06

6 minutes, 6 secondsYeah. Right now, engaging an architect, waiting for council approvals, and then trying to lock in builders and trades people who are totally bogged down by labor shortages, it’s a nightmare.

6:14

6 minutes, 14 secondsPlus the volatile material cost we talked about. Exactly. A three-year renovation could easily stretch to 5

6:20

6 minutes, 20 secondsyears with costs blowing out by 40%. So, wealthy buyers are doing the math and realizing that overpaying a premium for

6:30

6 minutes, 30 secondsa finished Agrade home today is actually cheaper. Wow.

6:35

6 minutes, 35 secondsAnd vastly less stressful than the holding costs and risks of a multi-year build.

6:39

6 minutes, 39 secondsSo, the premium isn’t for the marble, it’s for the absence of a builder’s contract.

6:43

6 minutes, 43 secondsPrecisely. But the flip side is if a prestige property falls even slightly short of those turn-key expectations

6:50

6 minutes, 50 secondslike if it needs a new roof or even just a kitchen update, it suddenly faces an incredibly cautious buyer pool.

6:56

6 minutes, 56 secondsAll right, so we have cautious wealthy upgraders hitting the pause button.

7:00

7 minutesLogic dictates that at the very bottom of the market, the entry-level suburbs, where buyers are obviously the most sensitive to interest rates, things should be totally frozen. You would think so.

7:08

7 minutes, 8 secondsBut the HTW data shows the exact opposite. First-time buyers are flooding the market in an absolute frenzy. Let me challenge you on this. How is that even

7:16

7 minutes, 16 secondsmathematically possible? It’s a fantastic question. I mean, with rates at 4.0%.

7:22

7 minutes, 22 secondsThe banks have to stress test these first-time buyers at over 7%.

7:27

7 minutes, 27 secondsHow are entry- level buyers passing those stress tests right now? Because the math does seem impossible on the surface,

7:35

7 minutes, 35 secondsbut if we connect this to the bigger picture, the demand is being artificially unbottled by policy. Ah, right.

7:43

7 minutes, 43 secondsSpecifically, the Albanesei government’s revamped first home guarantee that kicked in back in January 2026.

7:49

7 minutes, 49 secondsAnd look, we’re not taking any political stance here. We’re just reporting the math. But looking purely at the mechanics of this policy, the math is wild.

7:56

7 minutes, 56 secondsIt really is. They removed income caps entirely, lifted the property price thresholds, and opened an unlimited number of places for eligible buyers.

8:04

8 minutes, 4 secondsYeah, the mechanical effect of removing those caps, it just cannot be overstated. Suddenly you have this massive cohort of buyers who previously earned too much for government

8:12

8 minutes, 12 secondsassistance, but they didn’t have the 20% deposit saved up, right?

8:15

8 minutes, 15 secondsAnd suddenly they are empowered to buy with just a 5% deposit without paying lenders mortgage insurance, which is huge. You inject that newly

8:23

8 minutes, 23 secondsarmed buyer pool into a market with historically low supply and it acts like rocket fuel on entry-level prices.

8:30

8 minutes, 30 secondsBut wait, that still doesn’t explain the stress tests. Giving someone a 5% deposit allowance doesn’t lower their monthly repayment. No, it doesn’t.

8:38

8 minutes, 38 secondsAt a 7% stress test, the monthly servicing has to be brutal.

8:42

8 minutes, 42 secondsOh, it is brutal. And how they are passing it is through a combination of extreme lifestyle sacrifice, dual income households, maxing out their borrowing

8:51

8 minutes, 51 secondscapacity to the absolute dollar, and an unprecedented reliance on the bank of mom and dad to bolster deposits or act as guaranurs.

8:59

8 minutes, 59 secondsExactly. They are doing this because the alternative actually feels worse. The ultimate FOMO factor.

9:05

9 minutes, 5 secondsIt’s beyond standard FOMO really for these buyers. It’s a terrifying calculus. They look at those same prohibitive construction costs we just

9:12

9 minutes, 12 secondstalked about in Belleview Hill and they realize the pipeline of new suburban housing is basically dead. Right?

9:18

9 minutes, 18 secondsThe perception isn’t, “Oh, I might miss out on a good deal.” The perception is if I don’t buy now, no matter how much it hurts my monthly budget, I will be

9:26

9 minutes, 26 secondspermanently locked out of home ownership. That is a very grim calculation. It is.

9:31

9 minutes, 31 secondsAnd the report highlights a fascinating byproduct of this desperation.

9:35

9 minutes, 35 secondsThey call it champagne location on a beer budget. Yes, buyers are desperate for these prestige postcodes, but their borrowing capacity

9:44

9 minutes, 44 secondsis completely tapped out. So, they have to compromise, which creates a massive subdivide. Just like the prestige market, the

9:51

9 minutes, 51 secondsentry-level market has split into agrade and secondary stock.

9:56

9 minutes, 56 secondsAnd the mechanism is identical. I mean, if an entry-le home is turnkey, maybe it’s small, but the kitchen is done, the paint is fresh, these maxed out buyers

10:03

10 minutes, 3 secondswill just fight to the death over it at auction.

10:06

10 minutes, 6 secondsAbsolutely. But the classic fixer upper, the B or C grade home that needs a quick 50 grand bathroom and kitchen

10:13

10 minutes, 13 secondsrenovation. It’s sitting on the market gathering dust because the buyers literally have zero cash left after securing the mortgage.

10:20

10 minutes, 20 secondsThey can’t afford the inflated labor rates to hire a plumber and they can’t afford the materials. Yeah.

10:25

10 minutes, 25 secondsThe fixer upper has transformed from the classic Aussie wealth building opportunity into a total financial trap.

10:32

10 minutes, 32 secondsThat structural reality, the sheer prohibitive cost of building and renovating is the perfect bridge to our next sector. Let’s look at where you work.

10:40

10 minutes, 40 secondsThe commercial office space.

10:42

10 minutes, 42 secondsYes. Because the exact same construction costs and shifting post-pandemic habits are completely rewriting the rules of our CBDs.

10:50

10 minutes, 50 secondsThe commercial sector is undergoing an evolution that is just as fractured as the residential market. Honestly, if not more so.

10:57

10 minutes, 57 secondsThe baseline numbers in the HTW report are just staggering. National CBD office vacancy is at 14.8% which is high.

11:05

11 minutes, 5 secondsPre- pandemic that was closer to 8%. In Melbourne we are looking at 19% vacancy and in North Sydney 25.9%.

11:14

11 minutes, 14 secondsMore than a quarter of all office space is empty.

11:16

11 minutes, 16 secondsAnd to combat that, landlords are deploying some really extreme defensive measures.

11:21

11 minutes, 21 secondsAnd here’s where it gets really interesting. The report notes landlords in Sydney are offering incentives approaching 40% just to get a signature on a lease. Y

11:29

11 minutes, 29 secondsnow when I hear 40% incentive, my brain assumes the landlord is just dropping the rent by 40%. But that’s not what’s happening at all, is it?

11:36

11 minutes, 36 secondsNot at all. A 40% incentive usually means the landlord keeps the baseline red high, but they offer a massive rent-free period sometimes, like 18 months on a 5-year lease.

11:47

11 minutes, 47 secondsWow.

11:47

11 minutes, 47 secondsOr they write a multi-million dollar check to completely pay for the tenants’s new custom office fit out. So

11:56

11 minutes, 56 secondslandlords are treating office space like those cheap inkjet printers. They will take a massive financial hit, giving you

12:03

12 minutes, 3 secondsthe printer for free, the custom fit out, just to lock you into a 5-year contract, buying their overpriced ink, which is the baseline rent.

12:10

12 minutes, 10 secondsThat is the perfect analogy.

12:12

12 minutes, 12 secondsBut why are they doing it this way instead of just lowering the rent? I mean, surely lowering the rent is easier because it protects the underlying valuation of the entire skyscraper.

12:21

12 minutes, 21 secondsCommercial properties are valued based on their gross rental yield. If a landlord officially drops the baseline rent across the building, the capital

12:30

12 minutes, 30 secondsvalue of the tower plummets by tens of millions of dollars, which triggers a crisis with the banks holding the loans on those buildings.

12:37

12 minutes, 37 secondsExactly. So landlords effectively act as venture capitalists for your office build. They absorb the upfront capital

12:44

12 minutes, 44 secondsexpense to maintain the illusion of high rental yields on paper.

12:48

12 minutes, 48 secondsThat is an unbelievable mechanic. So, how are companies actually reacting to this printer inc strategy? The report

12:56

12 minutes, 56 secondspoints out two diverging paths, the flight to quality and the flight to value.

13:01

13 minutes, 1 secondRight. So, in places like Adelaide and Brisbane, the flight to quality is in full swing. Companies are looking at these massive landlord incentives and

13:08

13 minutes, 8 secondsrealizing they can upgrade from an aging B-grade building into a premium A-grade state-of-the-art tower entirely on the new landlord’s dime. Because the

13:17

13 minutes, 17 secondsultimate goal for the CEO right now is luring staff back to the desk. Absolutely.

13:21

13 minutes, 21 secondsYou can’t force employees out of their home offices to sit under flickering fluorescent lights in a dingy cubicle.

13:26

13 minutes, 26 secondsYou need end ofrip facilities, wellness spaces, barista coffee in the lobby.

13:31

13 minutes, 31 secondsExactly. Employers are using the soft market to upgrade their real estate to an experience-driven model for free. But if we look at Perth, the psychological

13:40

13 minutes, 40 secondsresponse to the current economy is totally different. They were executing a flight to value.

13:44

13 minutes, 44 secondsWhy Perth? I mean, the mining sector is booming over there. You’d think they’d be building the shiniest new offices in the country.

13:50

13 minutes, 50 secondsWell, the mining engine is strong, but there is a persistent underlying economic anxiety over there about global

13:57

13 minutes, 57 secondsdemand and inflation. Perth tenants are highly riskaverse right now. Okay?

14:02

14 minutes, 2 secondsThey know that even with a landlord incentive, moving offices requires massive internal disruption and hidden

14:08

14 minutes, 8 secondscosts. So instead of upgrading they are going to their current landlords and saying we will renew our lease avoid the disruption of moving but you need to

14:17

14 minutes, 17 secondsgive us a straight rent abatement to keep us here.

14:20

14 minutes, 20 secondsThey are prioritizing absolute cost control over premium amenities.

14:24

14 minutes, 24 secondsIt just shows how local sentiment completely changes the application of capital and we have to mention the massive outliers. Brisbane commercial

14:32

14 minutes, 32 secondsreal estate is booming underpinned by the hard infrastructure timeline of the 2032 Olympics. You can’t fake an Olympic

14:40

14 minutes, 40 secondsdeadline. That is guaranteed money flowing into the city.

14:43

14 minutes, 43 secondsYeah, that’s a fixed point. And then there is the Sunshine Coast which recorded a microscopic office vacancy rate of 3.4%.

14:50

14 minutes, 50 seconds3.4% compared to North Sydney’s 25.9%.

14:54

14 minutes, 54 secondsThat absolutely proves the pandemic shift to regional lifestyle hubs wasn’t a temporary blip. If the infrastructure is there, businesses want to be near the beach just as much as the workers do.

15:04

15 minutes, 4 secondsOh, for sure. So, what does this all mean for the listener? To me, it means we need a totally new set of mental models for 2026. The era of the rising

15:12

15 minutes, 12 secondstide lifting all boats where you could buy a property blindly and expect 10% annual growth is definitively over. Long gone.

15:19

15 minutes, 19 secondsRule number one, scarcity beats interest rates, as we saw in Adelaide’s prestige market. Rule number two, the cost of labor is dictating everything, making

15:28

15 minutes, 28 secondsturnkey residential homes skyrocket and turning B-grade fixer uppers into traps.

15:32

15 minutes, 32 secondsAnd rule number three, if you run a business, your future landlord is currently willing to bankroll your

15:39

15 minutes, 39 secondsentire office upgrade just to protect their balance sheet, which is wild. But this raises an important question, though, a concept

15:47

15 minutes, 47 secondsthat physically bridges the two completely different worlds we’ve discussed today. The residential frenzy and the commercial vacancy. Okay, what is it?

15:56

15 minutes, 56 secondsWe have a massive structural housing supply crisis. We simply do not have enough homes for the people who need them and the cost of building new suburban infrastructure is way too high.

16:06

16 minutes, 6 secondsRight?

16:06

16 minutes, 6 secondsAt the exact same time, we have older C-grade commercial office buildings sitting completely empty in our major CBDs with vacancy rates pushing 25% in

16:15

16 minutes, 15 secondssome areas because tenants only want premium A-grade spaces. Okay, I see the collision course here.

16:20

16 minutes, 20 secondsYou have empty towers in the city and desperate buyers push to the fringes.

16:24

16 minutes, 24 secondsRight. If construction costs are too high to build new housing and those secondary CBD offices are effectively obsolete as commercial assets, will the

16:32

16 minutes, 32 secondsnext great property boom be the mass conversion of abandoned mid-tier office blocks into residential apartments?

16:37

16 minutes, 37 secondsThat is the milliondoll or really billion dollar question. Yeah, but let’s debate the reality of that because converting a 1980s commercial

16:45

16 minutes, 45 secondstower into apartments isn’t just throwing up some drywall. The logistics are a nightmare. Commercial floor plates are incredibly deep, meaning the center

16:54

16 minutes, 54 secondsof the building gets absolutely zero natural light, which is illegal for residential bedrooms.

16:59

16 minutes, 59 secondsOh, not to mention the plumbing. An office tower has one central core of bathrooms for like 200 people on a

17:07

17 minutes, 7 secondsfloor. If you put 15 apartments on that floor, you have to core drill through 20 stories of post-tension concrete to run individual plumbing lines for 15 new

17:16

17 minutes, 16 secondskitchens and 15 new bathrooms, which sounds impossible. The engineering challenges are monumental.

17:21

17 minutes, 21 secondsAnd yet, if the land value of an empty commercial building drops low enough because no business wants to rent it, suddenly the math on that monumental

17:28

17 minutes, 28 secondsengineering challenge starts to pencil out.

17:30

17 minutes, 30 secondsExactly. It will require serious vision, massive capital, and likely significant zoning cooperation from local councils.

17:38

17 minutes, 38 secondsBut the underlying pressure in both markets, too many empty offices, not enough homes, is building to a point

17:45

17 minutes, 45 secondswhere a structural release valve is just inevitable.

17:49

17 minutes, 49 secondsIt really brings the whole picture into focus. We expected the economic map to show us a clear linear path. Rates go up, prices go down, but the map is broken.

17:58

17 minutes, 58 secondsThe map is broken. The only way to navigate this environment is to look at the individual moving parts to realize that the same construction cost crisis

18:06

18 minutes, 6 secondsmaking an unrenovated house unsellable is the exact reason a business can get a free office fit out. Yeah.

18:12

18 minutes, 12 secondsAnd maybe the ultimate solution is taking the sinking compartments of our commercial sector and re-engineering them into the lifeboats we desperately need for the housing crisis.

18:21

18 minutes, 21 secondsIt’s a complex landscape, but the opportunities for those who understand the mechanics are really significant.

18:26

18 minutes, 26 secondsWell, a huge thank you to you, our listener, for joining us on this deep dive into the Herren Todd White April 2026 report. We’ve navigated everything

18:35

18 minutes, 35 secondsfrom $25 million mansions to the hidden math of commercial leasing today.

18:39

18 minutes, 39 secondsRemember, the headlines rarely tell the whole story, but if you look closely enough at the mechanisms driving the data, the true shape of the market

18:46

18 minutes, 46 secondsalways reveals itself. Keep questioning the world around you and we’ll catch you on the next deep dive.