# WILSON WEEKLY Ep 146 | Special Episode | 2025 Year In Review

An episode of [Money Mentor Podcast™](https://invisiblenetwork.ai/podcast/1632604767), 20 Nov 2025, 56 min.

Audio: https://episode.flightcast.com/zmgzth4f8bfj5c8z2tcjsler.mp3

In this special Year in Review edition, Rachael Howlett and Doctor Andrew Wilson breaks down the big shifts, standout trends, and defining moments that shaped 2025. From rate cuts and price surges to shifting migration patterns, rising rents, auction intensity, land shortages, and first home buyer behaviour, Doc pulls the entire year into sharp, data-driven perspective. Whether you're a homeowner, investor, or simply trying to keep up with the constant property noise, this episode gives you the clarity, context, and no-nonsense insights that Wilson Weekly is known for. What moved the market? What surprised us? And what does it all mean as we head into 2026? Doc covers it all so you can step into the new year informed, confident, and ahead of the curve. Discover our new tool: What's My Rental Home Yield? Money Mentor YouTube Channel: @moneymentorau Link to Dr. Andrew Wilson on LinkedIn: / dr-andrew. If you enjoyed our podcast, make sure you follow and subscribe to stay up to date with the latest episodes.

## Transcript

[0:11] Wow, what a year, Doc.
[0:13] 2025 has definitely thrown a lot at us from rate cuts, price surges, easing migration.
[0:20] We've had rising rents and a property market that just keeps rewriting the headlines.
[0:25] So for our year in review edition, let's take a look back at what defined 2025 and where we are headed as we roll into 2026.
[0:34] So what have you got for us?
[0:36] Well, thank you, Rachel.
[0:37] And 2025 has certainly been another big year in property.
[0:40] We're going to see our third consecutive year of prices growth.
[0:44] Interesting that the last three years have averaged around about 7% per annum home price growth in our capital city markets.
[0:53] And that's spot on the long-term average.
[0:55] So homeowners should be pleased.
[0:57] And I still think we'll get some prices growth into 2026.
[1:02] But we'll talk about 2026 at the end of the year that was.
[1:06] And that's what we're going to talk about today.
[1:07] And of course, it's brought to you by My Housing Market.
[1:11] We are independent commentators.
[1:13] on the housing market.
[1:13] We also provide our own in-house data so we're not relying on third-party data sets here except for of course from what we get from the ABS and of course this is also brought to you by the good folks at Infinity.
[1:28] So 2025 drawing to a close and if you're a homeowner
[1:32] you'd be pretty happy with the results that you've got in most of the capital city markets.
[1:37] So my housing market, and as usual, when we talk about the housing market, we talk about interest rates.
[1:45] And this has been a big year for interest rates, three rate cuts,
[1:48] February, May, and then in August.
[1:51] And that certainly helped to refuel those markets that were just running out of steam at the end of 2024, but also put a rocket under some of the markets that were already strong.
[2:02] And I'm referring particularly to that Brisbane housing market.
[2:05] And even Melbourne has been up and running in 2025 after a number of years of subdued activity.
[2:11] So let's have a look at the data.
[2:15] And of course, it starts with interest rates.
[2:17] There's our interest rate cycle, that sort of roller coaster ride.
[2:20] It's interesting that the pattern since COVID has been so, I guess, volatile.
[2:26] Of course, the stimulus packages through COVID created a lot of inflation.
[2:31] In fact, it was the highest inflation we'd had in Australia since the early 1970s.
[2:36] Reserve banks stepped in, as other central banks did,
[2:40] to quell inflation by pushing up interest rates.
[2:43] And we finally got inflation seemingly under control in 2023-24.
[2:49] Interest rates were steady all the way through 2024.
[2:53] We're talking about official rates here.
[2:55] And as I mentioned, the Reserve Bank has cut interest rates with the sense that inflation was now within the target range.
[3:03] and therefore it was satisfied that it could start to ease monetary policy, which it's done.
[3:09] And you can see that clear shape.
[3:11] And those percentages there are average bank interest rate, mortgage interest rate.
[3:18] So down to 8% there.
[3:19] This is up to the September quarter.
[3:21] But of course, we're interested in what happens to house prices as a result of changes to
[3:26] to interest rates.
[3:27] So there's our major capital city housing market cycles.
[3:31] The gold cycle at the top there is the Sydney market.
[3:35] You can see as interest rates rise and fall, we get a change in the pattern of house price cycles and these are house prices and you can clearly see that from that period with
[3:47] Higher interest rates, prices fell through 2022, which were the first interest rate increases that we'd had in nearly a decade.
[3:55] But it didn't take long.
[3:56] In fact, just under a year for the market to recover.
[4:01] You can see there that top cycle, Sydney, how strong that was through 2023 and 2024.
[4:08] and into 2025 with those three interest rate cuts, you can just see how strong that Sydney housing market has been.
[4:15] Now the other cycles, the other housing markets, the other capital city housing markets have generally followed the same pattern as interest rates change, higher with lower interest rates, lower with higher interest rates.
[4:27] The exception really has been the Melbourne market and that's the black cycle there.
[4:31] As markets started to rebound following the interest rate rises in 2022, the Melbourne market actually remained stuck in the mud in a sense and just was quite flat.
[4:43] But lower interest rates have now activated the Melbourne market.
[4:47] We can see there this year that the Melbourne market is up and running.
[4:51] But the three smaller capital city markets there, which are Brisbane, Adelaide and Perth,
[4:55] have clearly followed that same pattern, a consistent pattern following interest rates.
[5:00] And the interesting one there is the Brisbane market, which certainly was very strong in the post-COVID period, mainly because of the surge in interstate migration.
[5:10] Those escaping, perhaps we could say, COVID lockdowns in Melbourne and Sydney.
[5:16] fled into South East Queensland.
[5:18] And of course, that put a lot of pressure on demand for housing.
[5:21] We saw rent skyrocketing in South East Queensland and prices rising as well.
[5:26] And the interesting point is that the interest rate cuts this year have brought the Brisbane median house price now higher than the Melbourne median house price.
[5:35] So Brisbane is now a more expensive place overall.
[5:39] to purchase a home compared to Melbourne.
[5:42] And we're also seeing Perth and Adelaide playing catch up as well with that Melbourne market.
[5:47] And perhaps we might even see Adelaide overtake Melbourne into 2026.
[5:53] But I think we're putting ourselves a bit ahead of the game there.
[5:56] But certainly that's been a very strong Brisbane market through 2025 and continuing forward.
[6:01] What's been a very strong three-year period for the Brisbane market.
[6:05] But you can see now it's all coming together now, the median prices for those smaller markets of Perth, compared to Sydney of Perth, Adelaide, Australia.
[6:16] Brisbane and Melbourne.
[6:18] But I think the interesting thing is you can just see the trajectory there, which is clearly revealed on this quarterly data set of house prices compared to what's happening with interest rates.
[6:29] So that's the story, the big picture story in terms of
[6:34] changes to interest rates over the year and over the past few years.
[6:39] Now, the latest interest rate decision from the RBA, which was the November decision that came on Melbourne Cup Day, they decided to, not surprisingly, leave rates on hold.
[6:51] And we can see the pattern of interest rate changes there.
[6:55] It's the same as the one we saw on the first slide.
[6:57] These are official interest rates now steady at 3.6%.
[7:01] The peak there was 4.35% through 2024.
[7:07] But we're still tracking lower than where we were at the peak back during the end of that big mining boom in 2012.
[7:16] But the whole reason we're starting to see interest rates steadying from the RBA is that we've seen a breakout in inflation, which is quite interesting because those interest rate cuts that we had earlier this year were about the...
[7:33] the RBA considering that they'd got inflation under control.
[7:38] Now the RBA has a target of maintaining inflation between two and 3%.
[7:45] So it uses, and has been until recently, using the quarterly measure
[7:49] of inflation from the ABS.
[7:52] We're now moving to a monthly measure of inflation.
[7:56] So we've seen the last of the quarterly data sets, but the RBA target has been to move into the midpoint of that two to 3% inflation rate, the quarterly inflation rate.
[8:07] But not the overall inflation rate, but what they measure as the underlying inflation rate, which takes out the volatile elements.
[8:14] That was on track, perhaps.
[8:16] They were a little bit optimistic that that would be consistent.
[8:19] And they have said in their latest meeting that they were surprised that inflation had started to rise again.
[8:26] But it has moved outside the target range.
[8:29] And the reason is that we've seen, and we can see here, this is the monthly inflation data.
[8:35] And you can see there now, just after looking like we're starting to get into the midpoint of the target range, we're now pushing to the outside point of the target range.
[8:44] And of course, this has significant implications for where interest rates go.
[8:48] Okay.
[8:50] But the big story has been the rise in inflation has been due to a surge in electricity prices.
[8:57] We really shouldn't be surprised about this.
[8:59] Inflation tracked downwards in 2024 because particularly of falling electricity prices.
[9:07] And those electricity prices fell because of the federal government subsidy, which we all realise was a significant $300 handout to households that pushed the price of electricity down.
[9:20] And as electricity is a significant component of what the ABS measures for inflation, of course, that pushed the inflation rate down.
[9:29] But, you know, all good things come to an end.
[9:31] The government subsidy finished...
[9:34] in June 2025.
[9:36] So as the subsidy finished, of course, electricity prices started to rise.
[9:42] We still have a subsidy, but it's what I call subsidy light, because it's just half the volume or the value of the previous subsidy.
[9:50] And the outlook for inflation therefore is that, because we don't have as a higher subsidy,
[9:56] that we're going to see higher electricity prices, obviously, and that's going to work its way into higher inflation.
[10:03] So the outlook is for higher inflation, certainly from higher electricity costs.
[10:10] Now the question is what will the Reserve Bank do in response to that if it occurs?
[10:14] Of course, we still have the prospect perhaps, because this is a political hot potato,
[10:19] of another subsidy, of perhaps a bigger subsidy, coming through from the government.
[10:23] Now the current subsidy, which is half that what the previous subsidy was, finishes at the end of 2025.
[10:30] So perhaps there will be some pressure on the government to reintroduce a subsidy and for electricity to try to maintain at least some stability for inflation, and therefore take pressure
[10:46] off the Reserve Bank in terms of interest rate policy.
[10:50] I don't think the prospect of higher interest rates are there, even though we may get higher inflation, because what are higher interest rates going to do to the price of electricity?
[10:59] Well, really nothing.
[11:00] And all they'll do is have an effect on the business cycle, which is already starting to show some signs of easing, predictably easing, even though our economy remains quite strong.
[11:13] So we can see here quite clearly the impact of changes to electricity prices as a result to changes of the subsidy.
[11:23] You can see here as the subsidy came in in 2024, 2023, 2024, we had big falls in electricity prices.
[11:31] But as the impact of the subsidy fell, we can see how electricity prices have increased as a result of not having the subsidy.
[11:42] We see the inflation rate here as electricity prices fell, inflation fell.
[11:48] But of course, once we started to see the lowering impact of the subsidy, then inflation started to rise again.
[11:55] And of course, we're expecting the same sort of outcome with higher electricity prices, which you can almost take to the bank because of the fact that we will be comparing electricity prices going forward now.
[12:07] with a period where there were strong subsidies, therefore lower prices.
[12:12] And when we put it all together in terms of interest rates, and this is the inflation target from the Reserve Bank, you can see now how we're heading above the inflation target.
[12:22] So, the prospect is for higher inflation.
[12:26] Even though we'll likely get some scary headlines about having to put up interest rates, I think that's unlikely because it's not really a solution to the real problem, which is just higher electricity prices.
[12:42] And Australia is facing the same problems as most
[12:45] advanced economies with the transition from the carbon economy to renewables taking longer and costing more than was originally hoped and forecast.
[12:56] So higher interest rates are not going to fix that.
[12:59] And as I said, that would have a negative impact on
[13:03] on the economy.
[13:06] So the other factor for inflation has been lower oil prices.
[13:12] We've seen a big fall in oil prices that has worked its way through to lower inflation.
[13:18] That's a global scenario.
[13:20] And in fact, we may actually get an offset to predictably higher inflation through higher electricity from lower fuel costs.
[13:27] So we're sort of saying we're looking at electricity rising,
[13:30] But that's assuming all things are equal.
[13:33] And we're already starting to see a fall in the price over October, which is the furthest we can project at the moment, an annual fall of 17% in the price of oil.
[13:44] So that will help to offset higher electricity prices.
[13:49] As I mentioned, we're just starting to see some easing this year in the economy in terms of the labour market.
[13:56] We had a higher unemployment rate over September, 4.5% up from.
[14:01] We've been really tracking in the mid threes for most of the past couple of years.
[14:05] We tracked up to around 4% and then we had a 4.5% blip.
[14:09] It will be interesting over September.
[14:11] It will be interesting to see if that's maintained.
[14:14] But the historical...
[14:16] Evidence shows us that even 4.5% is a low unemployment rate.
[14:21] And there were some contingencies in terms of that 4.5% rate, which was the highest for a couple of years, in terms of the ABS even admitting that there were some issues in regard to seasonal adjustment.
[14:34] And we also had a surge in new entrants into the jobs market, which created a higher percentage
[14:41] participation rate, which meant that we needed to absorb more into the labour market.
[14:49] So that can have an effect on higher unemployment.
[14:52] And you can see there that our participation rate has been historically high.
[14:56] And that's an important measure of the economy because it tells us the proportion
[15:00] of those above the age of the working age population of Australia that are actually working.
[15:06] And we're still at historically high levels of participation, which reflects generally a strong economy.
[15:17] Relatively low unemployment rates and high participation rates show us that we still have a strong economy in Australia.
[15:24] And, you know, as I said, it's called a business cycle for a reason.
[15:27] It moves up and down.
[15:29] We've been waiting, in a sense, to see an easing in what's been a very strong labour market over the past few years.
[15:36] Maybe this is a sign of this, but we really would have to start to see unemployment rates five and higher,
[15:42] for us to start to be concerned about the performance of the economy.
[15:48] The other factor that we saw this year, which has been a factor in housing market activity, was an easing in the migration rate, falling from once we opened our borders, we had a surge in inflation that did activate a number of housing markets, and caused particularly the rental markets a surge in prices in the rental markets.
[16:11] The government, the federal government has eased migration numbers, particularly for students, international students, to try to take some heat out of the rental market, which I think it's done.
[16:22] But of course, that's not good news for our education sector, which is a significant part of what happens in the economy.
[16:29] But certainly our migration levels are still strong, which means demand for housing remains high, just not as high as they were in the direct post-COVID period.
[16:39] But we can see there that the gold cycle there is Queensland, and Queensland still is very strong.
[16:44] In fact, net migration in Queensland is now tracking higher than New South Wales.
[16:50] So part of the reason we're seeing very strong property market activity in Queensland.
[16:57] Building approvals, one of the issues that's kept Australian house prices and rents percolating upwards has been the undersupply of housing in Australia.
[17:09] We're not alone here.
[17:10] This is a problem that most of the developed world is tackling, unable to match supply and demand, not enough houses to go around.
[17:19] Of course, this causes a lot of political pressure, higher rents and higher prices.
[17:24] Australia is not immune to that and has certainly underperformed.
[17:28] This year has been an interesting year in terms of building approvals.
[17:32] We've certainly seen a big increase in unit building approvals.
[17:35] State governments, particularly New South Wales and Victoria, have been proactive in
[17:40] in expediting a number of approvals, particularly for higher density development in Middle Ring and inner suburban areas in Melbourne and Sydney.
[17:49] And that's had a very positive effect.
[17:51] But of course, building approvals for units takes some years to become actual approvals.
[17:55] completion.
[17:56] So even though it's been positive, although volatile, a unit development, it'll still take some time for it to have a material effect on Australia's capital city housing market under supply.
[18:09] The other offset for that is that we've seen actually quite a tapered response from Australia
[18:16] from building approvals for houses.
[18:19] So this is the trend for national building approvals, seasonally adjusted.
[18:26] You can see that's really just flattened over the year.
[18:29] No great improvement there.
[18:32] and tracking similar to where we were at the same period last year.
[18:36] So even though we've seen a significant uptip in units, we haven't really seen a significant improvement overall in the trend for new home building, which is needed.
[18:47] And that's for houses, and when we look at units,
[18:50] Similarly, a bit of a pickup in units there, but not anywhere near the sort of levels that we need to be resupplying our housing markets.
[19:01] You can see houses are flat, units just picking up...
[19:06] slightly over the past few months, even though we have seen an increase in building approvals.
[19:11] Following two months of falling building approvals, the latest month of data, which was September, showed an increase
[19:22] But of course we need this to be sustained going forward because when we look at the big picture, and this is the big picture, this shows us annual building approvals month by month and we're still down 41.7% from the peak way back in 2016 and when we compare and that's for units and when we look at houses we can see how that trend for houses is just really going nowhere at the moment.
[19:47] So I
[19:48] An improvement, but not a great improvement, and not a lot of hope there to be able to match supply and demand in the foreseeable future in our capital city housing markets.
[20:00] So let's have a look at home prices.
[20:02] Of course, we've already discussed what's been a big year for home prices.
[20:06] The national home price, weighted average capital city house price, it increased for eight consecutive quarters up to October.
[20:15] And when we look at unit prices, they actually have increased the national weighted average monthly, quarterly.
[20:21] Unit prices increased over nine consecutive quarters, showing the drive that we had from those
[20:27] those lower interest rates.
[20:28] So just looking at the breakdown here, over the year we've seen very strong growth again from the Brisbane market, up by 13%.
[20:38] Melbourne's best result for some time, up by 5.9%.
[20:41] This of course is for houses.
[20:44] The Darwin market which is in boom mode,
[20:46] following a significant period of quiet housing market activity in Darwin, but up by 18.5% over the year.
[20:55] But the two yearly results are quite spectacular.
[21:00] Brisbane up by 31.5%, the Perth market up by 38.9%.
[21:01] Similar results.
[21:07] for the unit market.
[21:08] Interestingly, we're seeing Melbourne units outperform Sydney units over the year, and sort of about time if you're a unit owner in Melbourne because that has been quiet for units as well as houses.
[21:20] But that Brisbane market is just on fire.
[21:23] It just keeps on giving 19.9% increase in Brisbane unit prices over the year.
[21:30] And look at this, over the past two years,
[21:32] Brisbane unit prices up by a massive 50.6%.
[21:37] So some very strong results there, courtesy of lower interest rates for both houses and units, almost across the board over 2025.
[21:49] Interesting in the rental market, we've seen...
[21:51] Some increases in rents over the year, but certainly not the same levels of increases that we've had over previous years.
[21:59] But vacancy rates still remain low, and as they remain at very low levels, we're likely to eventually see higher rents coming through.
[22:07] So this is the latest rental data.
[22:09] Sydney's still the most expensive place to rent a house.
[22:12] $800 a week median asking rent.
[22:15] Same for units, $750 there.
[22:18] Vacancy rates are what's the standout here.
[22:20] Vacancy rates for houses in all capital cities are either just above 1% or significantly below 1%, which certainly indicates very strong competition for available properties.
[22:33] And even though the vacancy rate for units is a little higher than houses, it's really only Canberra and Melbourne that have
[22:40] Vacancy rates that are anywhere near balanced between supply and demand at 2%, but falling.
[22:46] The other capitals are still similar to houses, well below 2%, but certainly just above 1% or below 1%.
[22:58] So let's have a quick look at what the regional markets have done.
[23:01] Interestingly, when we look at regional markets, we can see that regional markets pick up the energy from the local capital city markets.
[23:07] These are the major local government areas.
[23:10] In New South Wales, we can see the closer you get
[23:13] to South East Queensland, the higher the prices, Tweed up by 8.7%.
[23:19] Ballina also up by 5.8%.
[23:22] But it's the southern part, Shell Harbour and Shoalhaven, that have been underperformers.
[23:28] As you move north from Sydney, there seems to be more demand.
[23:31] The interesting thing that we've seen in Victoria, in terms of local government area performance,
[23:36] is that similar to the revival we've seen in the Melbourne market, we're now starting to see the local government areas also revive.
[23:43] This is the first time in a number of years that we've seen such consistent prices growth, annual prices growth in the Melbourne local government areas.
[23:53] And it's being led by the more affordable
[23:55] Local government areas, Shepparton, Ballarat and Latrobe.
[23:58] And we're also starting to see some growth now in the more prestigious, the higher priced areas, local government areas in Victoria, the Surf Coast and the Mornington Peninsula.
[24:07] But interesting, we're seeing that revival in the local government areas in Melbourne, similar to what we've seen in Victoria, I'm sorry, also compared to similar to what we've seen in Melbourne.
[24:18] Queensland, however, is a knockout.
[24:21] Look at this.
[24:22] Local government areas in Queensland are all tracking above 10%, well, Noosa's 9.9%, but some of these markets are recording spectacular growth.
[24:32] Townsville up by 23%.
[24:34] 0.8% following a lengthy period of subdued activity in Townsville, but really right across the board, those Queensland local government areas have been performing strongly.
[24:43] Look at the Gold Coast, up by another 15.5% over 2025, following two or three years of very strong growth.
[24:53] Tasmania also providing some growth, although the Hobart local government area is the underperformer and we've seen that Hobart has been, compared to the other capital cities this year, not quite as strong.
[25:05] But Darwin is in boom mode, Palmerston up by 23.8% and the Darwin local government area up by 12.9%.
[25:13] So some very positive results there generally, even for Victoria which has been a very good
[25:20] an underperformer in terms of the local government areas, the major local government areas.
[25:25] As usual, every week we look at the auction results.
[25:27] They're a great forward indicator of what's happening generally in our housing markets.
[25:32] And no surprise that auction results, we've been able to track an improvement in the markets through the year, particularly as those interest rates fell.
[25:39] These are the latest auction results that we have.
[25:42] We're moving into the second half of, or sorry, the last part of the spring selling season.
[25:47] Big numbers of auctions, as usual, come into the market through November and into December.
[25:52] That acts to push down clearance rates because we have more choices for buyers and more competition for sellers.
[26:01] But what we're seeing is that clearance rates are still quite strong and in favour of sellers, despite the surge in sales.
[26:09] in auction numbers.
[26:09] But when we compare to where we were over the same period last year, we can see a very strong improvement this year.
[26:17] And of course, that just reflects how strong the markets have been.
[26:23] That auction clearance rates are now significantly higher.
[26:27] But what we're also seeing is even when we're seeing higher numbers of auctions coming into the market and clearance rates marginally lower than what we've seen, the actual numbers of sales are higher.
[26:39] And we're seeing near record numbers of auction sales coming through because of the higher numbers of listings and still high clearance rates.
[26:49] So just summarising everything for this year, inflation fell sharply as we've seen through 2024 and into 2025 due particularly to lower fuel and electricity prices and the RBA predictably cut interest rates.
[27:05] Rate cuts activated housing markets as we've seen, generating strong prices growth in most capitals.
[27:11] National economy remains strong although
[27:14] Jobless was a little high, it's still relatively low, a little higher, and will be boosted by those lower interest rates.
[27:20] Sharp increases in inflation due to the end of the electricity subsidy have sidelined, in my opinion, in the shorter term particularly, any more RBA cuts.
[27:31] Higher interest rates, if they did come, would be unlikely due to the easing of the business cycle, which is already looking like it's starting to taper.
[27:39] So home prices are set to continue rising generally next year, despite steady interest rates, higher inflation and higher jobless.
[27:48] Underlying demand remains well above supply, reflecting that underbuilding that we saw.
[27:52] High migration, still high migration, and the first home buyer scheme from the government, which is certainly activating tens of thousands of new buyers into the market that aren't bringing a trade in property because obviously they're first home buyers.
[28:07] Brisbane, Adelaide and Perth to remain the top performers.
[28:11] Sydney consistently robust and Melbourne continuing to revive moderately.
[28:17] We have lots of fear of missing out momentum driven by higher prices of course and that will continue to drive markets into 2026.
[28:26] And I think that annual results will still be above average but lower than the 2025 results overall.
[28:34] which have been quite steady.
[28:36] And I think that it just reflects, again, how robust and resilient Australia's capital city housing markets are.
[28:44] And I expect that to continue.
[28:46] A lot of negativity, of course, we have to deal with in terms of housing market activity.
[28:51] But this is the long-term crisis.
[28:53] This is the long-term chart of national capital city house prices from December quarter to December quarter, going all the way back to 1987.
[29:02] And we can see we've only had three periods where we had negative growth on that measure way back in 2008, which was the global financial crisis, down by 4.4%, 4.1% where we had higher interest rates due to a mining boom.
[29:18] And then in 2018, where we had a big scare campaign, but it was the peak of a very strong period of growth that we were obviously seeing some easing in activity.
[29:29] And then 4.3% down when we increased interest rates for the first time in 10 years in 2022.
[29:36] And we've seen a remarkably consistent period over the past three years, 8.5%, 7% and likely 9% when we finish off.
[29:44] So that's the reality of the performance of Australian house prices and an average 30 year annual growth rate of 6.8%.
[29:54] But we will continue to see or to read or to view scare campaigns and the prospect of sharp falls in Australian house prices.
[30:03] But the historical evidence shows clearly that that doesn't occur.
[30:09] So it's important, this is what we do in presenting our outlook for the market, is that misinformation and ignorance remain the curse of Australian housing markets, of course, except for those that rationalise and act on the fear it generates.
[30:24] And rationalisation is why we bring you these data sets.
[30:28] And because we use evidence-based insights into the housing market, we tend to be right more often than we're not.
[30:36] In fact, I don't think we're ever wrong.
[30:37] But that's another story.
[30:39] Because with Australian housing markets, there is nothing to fear but fear itself.
[30:45] And as well as our insights into capital cities and regions, my housing market in conjunction with the good folks at Infinity bring you a suburb level housing market app, which means you can get insights, real time insights into what's happening in terms of housing.
[31:08] suburb activity for suburbs that have data.
[31:12] If you want to get hold of that particular app, there is a hot link to click on or a QR code you can scan, but you need to get a password for access from infinity.
[31:24] But it's worth getting.
[31:25] Here's a screenshot here.
[31:26] Put it on your desktop, put it on your phone.
[31:28] You can filter it for price or rent.
[31:30] You can filter it for outside capital city or capital city regions, suburb.
[31:35] You can filter for house unit or townhouse and the number of bedrooms, so that's great.
[31:40] All these, you can drill down to smaller parts of the market.
[31:43] And it gives you not just the median asking price, and of course these are asking prices.
[31:48] So they're telling you here and now what vendors and agents expecting from the market, not just the medium, but the high and the low.
[31:55] So you get the range of prices being asked at the moment on that suburb basis and the number of properties for sale.
[32:02] And exactly the same thing for the rental market, which we have there as a screenshot.
[32:06] And we also have insights for investors, which are showing current yields, and these are gross yields based on the annualized rent, current asking rent annualized into the current asking prices.
[32:20] So, and it's ranked, the top 10 are ranked here, and you can click onto the hot links there to give you a map of where these suburbs are, and also shows you the suburban vacancy rates, the number of properties for rent and for sale.
[32:33] So that's about as good as it gets if you're looking for insights
[32:37] into the housing market.
[32:38] So that's all from me, Rachel.
[32:41] It's been a big year 2025.
[32:43] I expect an interesting year 2026.
[32:47] But as usual, we can rely on the prospect, the very real prospect of higher house prices again, you know.
[32:56] But it will be an interesting year.
[32:57] And I still think we've got plenty of energy left in our housing markets for another year of growth.
[33:02] Well, thank you so much for that data and information, Doc.
[33:05] It is always very informative.
[33:08] I do have a couple of questions for you, if you don't mind.
[33:10] So this time last year, we were anticipating and talking about interest rate cuts and whether we're going to get any.
[33:17] Do you think looking back at 2025, the RBA found the right balance or have these interest rate cuts really surged that property boom?
[33:25] Well, I think that the Reserve Bank has reacted to lower inflation.
[33:30] I think perhaps we may have even got more interest rate cuts than the inflation data indicated.
[33:35] Of course, we've had lower inflation, firstly because of lower fuel costs, and now recently because of lower electricity costs, which of course is reversed.
[33:45] And this is the issue, is that going forward we're more likely to see rates perhaps on hold rather than falling, and certainly not...
[33:53] going upwards given that we've got some weakening in the business cycle.
[33:57] So I think that the Reserve Bank's reacting to data as it comes through.
[34:01] We've seen, as you would have expected with three cuts to interest rates, certainly over a short period of time, higher house prices.
[34:10] And I think the housing market has responded because it was just starting to run out of puff a little bit at the end of last year.
[34:17] Yeah.
[34:18] after two years of reasonably strong growth.
[34:21] So refuelled housing markets, lower interest rates.
[34:25] I think going forward in the shorter term anyway with the data that we have, that we'll most likely have a period of flat interest rates.
[34:35] So I think we'll continue to see house price growth.
[34:39] And I don't think it'll be too far away from where we've been over the last couple of years.
[34:42] But we are in the lap of the gods in terms of the outlook for inflation and for what's going to happen in terms of the labour market, particularly the economy.
[34:54] But I don't think, I think, so we're not really at a position where we can say we've got it right.
[34:58] Yeah.
[34:59] But we're just moving in tune with what the macro economy is telling us.
[35:04] Okay.
[35:05] And we know that our energy prices or electricity prices also drives those types of decisions.
[35:10] We had some questionable comments from the RBA this year.
[35:12] Well, strange.
[35:13] Some strange comments there.
[35:14] How do you foresee some of those subsidies that we know are disappearing now is going to impact 2026?
[35:21] Well, I guess hindsight's always accurate, isn't it?
[35:23] And when we look back, we would have thought that, oh, yeah, once the subsidies finish, when we see the trend of inflation falling as electricity prices fell through the subsidy, and then, of course, interest rates falling as inflation falling, we thought, well, what happens when we stop having the subsidy?
[35:42] Well, shouldn't that mean higher electricity prices and therefore higher inflation?
[35:46] Well, of course, that's exactly how it panned out.
[35:48] because the major subsidy finished at the end of the 24 financial year.
[35:54] And even though we still have a subsidy, it's sort of subsidy light.
[35:58] It's only half the subsidy that we had in the previous iteration of that.
[36:03] So, of course, that means we've seen an increase in electricity prices.
[36:07] In fact, electricity prices over the year to September increased by 33.3%.
[36:11] Now, that's a big rise, Rachel.
[36:13] That's a big number, yeah.
[36:15] Yeah, and that's a tough ask for households.
[36:18] And of course, the housing measure for the CPI, the inflation rate, it has the highest weighting of any of the basket of goods.
[36:30] So the ABS says, well, housing, which includes energy, electricity, is the most significant cost that you have in terms of all the various costs that they've calculated into their inflation rate.
[36:44] Yeah.
[36:44] Interestingly enough, the last time, and they do their weightings every year, the last time they did their weightings, they actually, the housing factor fell.
[36:54] But that was because of the subsidy, because that's last year.
[36:57] So when they redo their weightings, it'll go up because the electricity prices have gone up and it's a bigger component.
[37:06] for the household spend.
[37:08] So that means not only will we see higher electricity prices, because we will, because there's no subsidy or less subsidy compared to when we did have the subsidy, it'll also take a bigger proportion because the weightings would have risen.
[37:21] Yeah.
[37:21] So it's sort of, you know...
[37:24] exacerbating itself and that means higher inflation and that means you know issues in regard to where we go with interest rates and i don't think that means that we'll have an increase in interest rates because of higher inflation because what's higher interest rates going to do to the cost of electricity yeah
[37:43] But I do think, you know, let's watch this space.
[37:46] Maybe the government will be under some pressure to reintroduce a full electricity subsidy because there's a lot of political heat out there in regard to electricity prices.
[37:57] It's not just in Australia.
[37:59] it's in most advanced economies are suffering because the transition from the carbon economy to renewables is taking longer and costing more than was hoped and maybe expected.
[38:12] So therefore, you know, there has to be perhaps another adjustment process from the government in terms of a subsidy, which will only put downward pressure on inflation and,
[38:24] and keep the, I guess, the argument against higher interest rates, which I think is nonsensical, at least on hold for a while.
[38:32] But it has been an electricity story over the past 12 months in terms of the inflation rate.
[38:37] I don't think there's any good news going forward in terms of where electricity will go, because we can't keep having it subsidised, but
[38:47] constantly, I don't think.
[38:49] But of course, we have other factors to consider in terms of inflation, such as fuel.
[38:54] Yeah.
[38:55] And I know we've had some easing in migration this year as well.
[38:59] Do you think that easing in migration has helped slow the demand in property?
[39:04] Or are we just really replacing it with our first home buyer scheme?
[39:06] Well, for buyers, yes.
[39:08] I do think it hasn't had an impact on the buying market, but I do think at the margin it's had an impact on the renting market.
[39:17] And I think that we did see some reduced demand for rental properties over the past 12 months, particularly from students.
[39:24] The government did act to reduce migration numbers appropriately.
[39:28] particularly from international students.
[39:30] And I think that that did have an effect on demand for rental properties, particularly inner city units.
[39:37] But I think that's short-termism in a sense, because we're not building enough to replace what we need or to cover what we need.
[39:44] And of course, it's a little bit of a vexed issue for the government reducing student migration because it's such a strong factor of demand for universities.
[39:55] It only sort of makes it tougher for the business cycle because it's such a strong part of Australia's income is exports of education, education exports.
[40:06] But I do think it did have an impact on demand for rentals.
[40:10] And I think that did ease rental growth, which was skyrocketing in the post-COVID period.
[40:17] Yeah, awesome.
[40:18] So we have seen a very strong property market, as we said, this year in 2025, particularly in Melbourne, Adelaide, Gold Coast and Brisbane.
[40:27] So a bit of a four-parter for you, Doc.
[40:29] Give me your key points of why you think those particular markets have been so strong in 2025.
[40:33] Well, let's start with Melbourne, which sort of went nowhere when we did start cutting interest rates three years ago post-COVID.
[40:40] or when we came out of the post-COVID period.
[40:44] So Melbourne's been in catch-up mode.
[40:46] We did discuss the fact that it was an opportunist market, the Melbourne market, because really its fundamentals were the same as the other capital cities, but it just kept going nowhere when the other major capitals were rising.
[40:59] So I think it sort of moved into catch-up mode when we did get those three interest rate cuts this year.
[41:04] But interestingly enough, even though it was starting to grow again, the Melbourne market, we saw almost, not miraculously, but certainly...
[41:16] Interestingly, we saw that Brisbane became more expensive than Melbourne.
[41:20] So the Brisbane median is now higher than the Melbourne median.
[41:23] And in fact, the Adelaide median is now starting to close in on the Melbourne median, which will have its best year.
[41:28] Melbourne market will have its best year.
[41:32] since the fall in interest rates in 2022.
[41:36] So it's on the comeback trail, Melbourne, but there are still parts of that Melbourne market, particularly the higher priced parts of the Melbourne market, which are underperforming.
[41:45] On the other end of the scale, that Brisbane market just keeps on keeping on.
[41:48] Yeah.
[41:48] Be close to 15% growth in Brisbane this year.
[41:52] It's just year after year of double figure growth in that Brisbane market and just shows no sign of slowing down.
[41:58] No, no.
[41:59] Adelaide similarly Adelaide and Perth had a period at the end of last year where affordability barriers just started to ease prices growth but those markets were both refuelled by lower interest rates so they're up and running again this year and some of the smaller markets Darwin's moved into boom mode after being quiet for a number of years but the Darwin markets certainly up and about Hobart which tends to be go the other way than most of the other capital city markets
[42:27] had a strong start to the year and just started to ease off, but looking to pick up again that Adelaide market.
[42:33] And similar to Melbourne, the Canberra market's really been an underperformer as well.
[42:39] It typically follows the Sydney market, the Canberra market, but it went sideways for most of 2024, but it too is now showing signs of picking up.
[42:48] So look, lower interest rates drive higher prices generally.
[42:51] We've seen that with some exceptions and the underperformers, Melbourne and Darwin and Canberra are certainly in revival mode.
[43:01] Some question marks over Hobart.
[43:03] And the Sydney market, of course, which I didn't mention, continues to be a solid market.
[43:08] And it'll have another very similar year to what it had in 2023, 2024.
[43:13] But gee whiz, that Brisbane market is just extraordinary the way it continues to grow.
[43:17] And of course, it's a story really with most of Queensland's major housing markets.
[43:21] Yeah.
[43:22] Now with our mid-November Wilson Weekly, we did see an increase, a bit small, but an increase in the building approvals.
[43:29] Yes.
[43:29] If we start to see this trend upwards into 2026, how do you see this playing out for that really tight rental market?
[43:36] Well, we need more property.
[43:38] It's not just for the rental market, but it's also for buyers as well.
[43:41] We had the federal government introduce a first-home buyer scheme in October, and that will be taken advantage of by likely tens of thousands of first-home buyers, which is great news.
[43:53] uh realizing the the great australian dream um but the problem is they're not bringing any houses in they don't have a trade in their first home buyers you know so it's it's it's more about you know under balancing the market um in terms of supply versus demand
[44:10] A good sort of comeback over September for building approvals after two months of falling building approvals.
[44:17] We still have some way to go to be able to say, yeah, we're on the road to resupplying our housing market.
[44:25] The concern is that we're getting plenty of unit approvals coming through, high-density unit approvals coming.
[44:30] State governments have been very active in expediting high-density approvals, pushing through restrictions for planning restrictions.
[44:40] But house approvals aren't getting that same sort of energy.
[44:44] And of course, it's good to see more building approvals for units, but they take some time to become actual completions, whereas houses are here and now.
[44:54] And what's a concern is that we're seeing falling building approvals for houses in Melbourne and Brisbane, particularly Brisbane, which as we've mentioned, is a very strong housing market at the moment.
[45:05] But to see fewer houses being approved for building in Brisbane this year so far compared to last year, and we're seeing, you know, pushing up to 15% prices growth, you know, it's a concern that that will only exacerbate higher prices and create even more affordability barriers into the market, particularly for first home buyers.
[45:24] Well, do you think because we are so far behind without in demand at the moment, there is a huge demand and we are behind, do you think there's going to be a bigger emphasis on those units?
[45:34] Well, there has to be because there's nothing much governments can do other than, you know, improve the planning restrictions because they have been, you know, the problem, you know, red tape, green tape planning restrictions that have kept development below the levels of 10 years ago when they're at their peak.
[45:51] We're still 40% plus below what we were building on trend in 2016 for unit approvals.
[45:59] So still some way to go to get to that level.
[46:02] Yeah.
[46:03] And I think that, you know, this is a problem, and I think a longer-term problem for most advanced economies, that they just can't provide enough housing for their populace.
[46:13] And I think, you know, we're no exception there.
[46:15] And it is because of the growth in metropolises, in centres, which means that you can't continue to spread, that you've got to go up, and that means higher density.
[46:27] And there's a lot of political barriers to higher density development, you know, not in my backyard...
[46:32] And so much of planning regulations are determined by local factors, by local political
[46:38] And that's the same in Australia.
[46:40] You know, land planning is the responsibility of state governments and local governments, not the national government.
[46:46] So the national government can't just step in and say, that's it, we're going to build all, you know, it then becomes a political issue at the local level.
[46:53] And of course, people are very concerned about the characteristics of their neighbourhood.
[46:57] So they're, you know, they create tension for higher density development in lower density areas.
[47:04] in suburban neighbourhoods particularly.
[47:07] So we need more and we'll continue to build more and the pressure's there for governments to expedite that and it's good for the economy because it creates jobs but I don't think we can realistically expect in the outlook, even in the medium term, to be able to match demand with supply.
[47:24] Yeah.
[47:25] Okay.
[47:25] Now we can't let the capital cities get all the attention.
[47:28] We've seen very strong regional markets as well, almost unprecedented how quickly they've grown, particularly Gold Coast, Newcastle, Hunter region and Adelaide.
[47:38] Do you think these regional hotspots are here to stay in 2026?
[47:41] Well, it's interesting when we look at the major local government areas in each of the states, they tend to follow what's happening at the capital city.
[47:49] It's as though the energy flows outwards from the capital city.
[47:53] And that's a classic example when we look at the Queensland local government areas, it's quite extraordinary to see the sort of growth that we're seeing all the way from the Gold Coast up to Cairns.
[48:03] We're seeing some markets growing by over 20%, nearly 30% annually.
[48:08] Townsville, the Fraser Coast, Gladstone, these areas have had quite extraordinary growth.
[48:14] And the underperformer with the latest data is Noosa, and that's 10% growth over the year, and that follows some very strong results in Noosa.
[48:23] in the post-COVID era.
[48:25] So it's just blue sky as far as Queensland regional markets are at the moment.
[48:30] The Gold Coast will get another 15% likely this year, but it's not alone.
[48:35] Most of those major local government areas in Queensland on the eastern seaboard are recording very, very strong prices growth and really no sign of slowing down.
[48:48] And New South Wales, perhaps it eased a little bit, but most of the action is,
[48:52] as typically happens north of Sydney.
[48:55] That's where you get the highest prices growth.
[48:59] And, of course, working their way up to areas such as Ballina and Tweed, which, of course, are adjacent to the Gold Coast.
[49:05] So they're picking up that sort of Gold Coast energy as well.
[49:08] But south of Sydney is where we see the less than – well, the underperformers.
[49:13] So Shoalhaven and Shell Harbour LGAs, even though they're growing and not growing at the sort of
[49:19] growth rates at the northern New South Wales markets are.
[49:23] And as you mentioned, the Hunter Valley is producing Newcastle and the Hunter Valley are producing double figure growth results as well.
[49:31] Now, interestingly, when we look at the Victorian local government areas,
[49:35] For the first time, Rachel, in a couple of years, we've been able to report growth, consistent growth in the major Victorian local government areas, which reflects what we've seen in the Melbourne market this year, which has been a definite revival.
[49:49] So the affordable markets, Shepparton particularly, have been the best performers, but we're even starting to see some of the prestige local government areas.
[50:00] such as the surf coast and the Mornington Peninsula, also producing some positive results.
[50:08] And the smaller markets, Darwin, very strong results there in the local government areas, the Darwin local government area, and producing there, reflecting what's happening generally in Darwin.
[50:22] And also the Tasmanian local government area is also producing some positive growth, the underperformer being actually the Hobart local government area being the underperformer.
[50:35] So regional markets, they've done well with lower interest rates, but according to what's happening in their local capital city, which is quite interesting.
[50:42] But we must point out those two factors.
[50:45] Queensland, quite extraordinary, the growth in local government areas.
[50:48] And Victorian local government areas are reflecting what's happening in the Melbourne market in terms of a revival.
[50:55] Yeah.
[50:55] But do you think the Australian mindset around where they want to live is also changing?
[50:59] I mean, apart from the answer ones being affordability, do you think people want more of lifestyle change too?
[51:04] And should the government be focusing on growth in those areas now?
[51:07] Well, it's always been an interesting question, Rachel.
[51:08] And the government has introduced decentralisation policies for a number of years, for a number of decades.
[51:15] But I still think there's a capture that a lot of the big capital city residents have to stay in the capital city.
[51:22] And I think that's because that the provision of infrastructure is so superior in most of the capital city markets compared to adjacent regional centres.
[51:31] You know, I guess the exception to that is the surge northwards out of the southern states into Queensland.
[51:37] Yeah.
[51:38] And I think that's what's explaining a lot of the growth that we're seeing in those Queensland regional areas flowing out from Brisbane, Sunshine Coast, Gold Coast.
[51:47] And maybe that is part of the sort of the interstate regional surge rather than surging into regional centres from the capital city.
[51:56] Because, you know, and as it grows, I think infrastructure...
[52:00] restrictions or underperformance from infrastructure will be overcome because of the development of population.
[52:09] But I don't think it's the sort of thing that we can look as a solution to higher prices in capital cities is decentralisation because people still want to be attached to high levels of infrastructure, also family, friends, recreation, these sort of scenarios.
[52:24] And that's why the push is upwards, not outwards in terms of development.
[52:29] But is the answer out?
[52:30] Should we be looking at further infrastructure?
[52:31] Well, if we could, but that would be providing infrastructure.
[52:34] But to provide the sort of infrastructure that we have in, say, Melbourne, Sydney and Brisbane in a regional centre is very expensive.
[52:41] And infrastructure tends to follow rather than lead.
[52:45] so you need to have the demand for the infrastructure before you get the big commitment from government to spend on infrastructure and we are always constrained for government spending anyway so it has to, as I said, follow rather than lead and that's why we see people remaining in the big capital cities rather than push out even though it would be a great solution I don't think that's... Theoretically it's a good solution but I don't think practically it's going to curse
[53:11] Okay.
[53:12] And what do you think we need to watch for in 2026?
[53:14] Give us your big overview of 2026.
[53:17] Well, I think it's interest rates.
[53:19] I think the Reserve Bank was a little caught, not caught off guard perhaps, but I think it was a little surprised what it was because it wasn't predicting inflation to break through its target range.
[53:33] So it's going to be watching very carefully to what happens.
[53:36] If we don't get more support for electricity prices, inflation will continue to rise.
[53:40] There's some thoughts that maybe even the oil price might rise next year, which isn't good news.
[53:46] No.
[53:46] Because we've had a consistent period of lower oil prices, but OPEC have actually said that they're considering reducing production for various reasons.
[53:56] So we need to keep an eye on that.
[53:58] But electricity is the main game.
[54:00] But what do the Reserve Bank do if inflation continues to rise?
[54:04] I just think that, you know, it doesn't make sense to be raising interest rates on the back of higher electricity prices.
[54:12] But, you know, it might be something the Reserve Bank looks towards.
[54:15] But I also think that a predictable easing in the business cycle with higher unemployment will also stop the Reserve Bank thinking about higher interest rates.
[54:25] I actually think we're in for a period of...
[54:27] of steady interest rates next year.
[54:29] I think that's a good thing for the market.
[54:31] I think we'll continue to see prices growth.
[54:33] I think the big performers will remain who they are, and I'm talking particularly about that Brisbane housing market.
[54:40] Sydney's steady as she goes, always a solid performer.
[54:43] Melbourne's still in revival mode.
[54:45] It's interesting that Melbourne units are growing faster than Sydney units at the moment.
[54:49] So it's actually taken the lead in the unit market, Melbourne compared to Sydney.
[54:54] Adelaide and Perth, I think, also have upside potential.
[54:57] I don't think we're going to be too far away next year, given our undersupply from what we've experienced this year, even without lower interest rates driving the market.
[55:09] And if we are below, I think we'll only be a couple of percent anyway.
[55:12] And it's interesting that if we add up the last three years of growth in Australia's housing markets, capital city housing markets.
[55:18] we're going to be around about what the long-term average is, which is just under 7%, which is the long-term average.
[55:25] And I'm talking about going back to 1986, the long-term average.
[55:29] And we've done that again over the last three years, even with no interest rate cuts and then interest rate cuts this year.
[55:37] So, and of course, dependent on maintaining a reasonably strong economy.
[55:43] And I do think that we'll continue to have
[55:46] you know, good economic outcome.
[55:48] So another good year for the housing market next year.
[55:50] I'm not sure we're going to see interest rate cuts.
[55:53] I'm not sure we'll see interest rate increases.
[55:55] I think it'll be more of a steady issue goes.
[55:57] And that's a good thing for the housing market.
[55:58] I think I have to agree with you, Doc.
[56:00] Well, what a year it has been.
[56:02] Thank you, as always, for another year of insights and truth bombs.
[56:06] And to everyone listening, that is a wrap on the year that was for 2025 with none other than Dr. Andrew Wilson.
[56:13] Here's to a strong...
[56:14] steady and maybe slightly less surprising 2026.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.