The Buyer Read: Midweek Market Update

The RBA has held at 4.10% — for now.

But two back-to-back rate hikes in February and March, combined with a sharp jump in inflation expectations, have left buyers in a holding pattern that may not resolve as cleanly as they're hoping.

Meanwhile, a fresh supply chain shock driven by the Middle East conflict is feeding directly into Australian construction costs.

Materials costs are surging again. Developers are shelving projects.

And the federal government's housing targets are now 81,000 homes behind schedule across the first 15 months of the Accord.

The Australian property market outlook for 2026 is not a collapse story.

But it is a tighter, slower, more constrained environment than buyers expected at the start of the year.

Here is what actually mattered this week, and what to do with it.

What mattered this week

The RBA held — but May is very much live

The cash rate stayed at 4.10% at April's meeting. That follows two consecutive 25-basis-point hikes in February and March. The hold was expected. What was less expected was the data that came with it: consumer inflation expectations jumped to 5.9% in April, the highest reading since late 2022. The March quarter CPI, due in late April, is now the single most important number on the calendar. If it comes in hot, a third consecutive hike in May is firmly on the table.

The IMF released its April World Economic Outlook

Titled "Global Economy in the Shadow of War," the IMF cut its global growth forecast to 3.1% for 2026, down from 3.3% in January. The driver is the Middle East conflict and its disruption to energy markets. The IMF flagged the possibility of a major energy crisis if the situation in the Strait of Hormuz deteriorates further. In its worst-case scenario, global growth falls to 2.5%, and inflation rises to 5.4%. That is not a prediction-it is the range of outcomes the IMF considers plausible. Australia, as an energy exporter, is better positioned than most - but we are not immune.

Construction costs just took another hit.

War-related supply chain disruption is flowing directly into Australian building costs.

PVC piping is up 37%, cement is up 25%, and quarry products arep 50%.

Rising diesel prices have added up to $20,000 to the cost of preparing a single residential block. These increases sit on top of a sector that has already seen total construction costs rise roughly 40% since 2020.

The result: marginal projects are becoming unviable, and developers are pulling back.

The National Housing Accord - which aimed to deliver 1.2 million homes over five years - is already 81,000 homes short across its first 15 months.

What it means for property buyers

On the demand side, borrowing power has been trimmed by two consecutive rate hikes, and the possibility of a third is real.

Sentiment has softened. ANZ has already cut its national house price growth forecast for 2026 from 4.8% to 2.8%, reflecting the drag that higher rates are starting to apply.

On the supply side, the relief buyers have been waiting for - more homes coming to market, more new builds easing pressure - is not arriving.

It is slipping further behind. When construction costs surge and projects become unviable, developers stop building.

That means fewer homes. Resale listings are not filling the gap at scale.

For owner-occupier buyers, the practical read is this: borrowing conditions are tighter and may tighten once more, but the structural shortage underpinning prices is not easing.

Prices are not falling. Growth is slowing. That is a different thing.

What buyers often get wrong

The most common mistake at the moment: conflating rate hikes with property price falls.

Rate hikes slow demand.

They reduce borrowing power. They can soften auction clearance rates and extend days on market. What they do not do is fix the supply.

When construction costs are at record highs, projects are getting shelved, and tens of thousands of homes are missing the government's housing targets, there is no wave of new stock arriving to offset buyer hesitation.

It is also easy to read an IMF growth downgrade as a signal to pause everything.

But the IMF's concerns are primarily concentrated in commodity-importing emerging markets and the conflict region itself.

Australia, as a resource exporter, faces a materially different set of conditions than the countries driving that headline number.

Reading the headline without reading the analysis leads to the wrong conclusion.

Waiting for certainty is a choice. It is just not a free one. While buyers sit out, well-priced properties in constrained markets continue to move.

What I'd pay attention to next

The March quarter CPI data, due in late April, is the number that determines whether May brings another hike.

Watch the trimmed mean, not just headline inflation. If core inflation stays elevated, the RBA has its justification.

Oil prices and energy market signals coming out of the Middle East deserve attention - not because they move property directly, but because they feed into construction costs, RBA decisions, and global sentiment simultaneously.

Also worth watching: listings volumes heading into May.

If more vendors try to move ahead of potential future rate decisions, supply could temporarily increase - giving buyers slightly more negotiation room in the short term.

Our view

This is not a market falling apart. It is a market adjustment.

The rate environment has tightened meaningfully, and buyers who stretched their borrowing capacity based on last year's assumptions need to recalibrate.

What has not changed is the structural picture: supply is constrained, construction costs are rising, and the gap between housing demand and delivery is widening.

That dynamic supports values in well-located, tightly-supplied markets over the medium term.

The buyers best positioned right now are those who understand their ceiling clearly, have done proper suburb-level analysis, and are ready to move when the right property appears - rather than waiting for a macro signal that may not come cleanly.

Final takeaway

The broader story this week - higher rates, climbing construction costs, a dimmer global outlook - is real.

But it is also well-suited to generating paralysis rather than good decisions.

The Australian property market outlook for 2026 is one of slower growth, tighter conditions, and a supply shortage that is unlikely to ease anytime soon.

Within that environment, buyers who are prepared and clear-eyed will find opportunities that less-prepared buyers will miss.

If you are weighing up a purchase in the Illawarra and want to understand how these conditions apply specifically to your search, we are happy to have that conversation.

---

This article is general information only. It does not constitute financial, investment, or property advice and does not take into account your personal objectives, financial situation, or needs. Property markets involve risk. Before making any property decision, seek independent professional advice.