Australia’s housing market is being reshaped by rising oil prices, global tensions, and projected consecutive interest rate hikes – changes that will affect buyers, owners, and renters alike.

Early signs of this shift are already visible across the states: Sydney (-0.1%) and Melbourne (-0.4%) have dipped slightly over the past quarter, while Perth, Brisbane, and Adelaide remain strong, illustrating a two-speed market driven by affordability and migration patterns.

Energy markets add another layer of uncertainty – analysts warn any disruption to oil shipments through the Strait of Hormuz could push global prices higher.  This would lift inflation and keep Australian interest rates elevated for longer.  High-priced markets are most sensitive and could see modest price falls if rates rise further.  In contrast, more affordable markets and regional hotspot areas are likely to remain resilient thanks to strong underlying demand and population growth.

So what does this mean for first-home buyers, baby boomers, renters, and landlords?

First home buyers may find conditions improve slightly in parts of Sydney and Melbourne if higher rates reduce competition and temper prices.  The trade-off is borrowing power.  Each rate rise makes servicing a loan harder and can keep many buyers on the sidelines for longer.  For those with secure employment and a deposit ready, a softer market may create better negotiating conditions.  For others, the bigger hurdle will remain affordability, not choice.

Baby boomers are in a comparatively strong position.  Many own their homes outright or carry low debt, so they are less exposed to rising mortgage costs.  If prices in premium markets soften, some may choose to delay selling until conditions stabilise.  Others may see opportunity in downsizing, particularly if they can sell well-located family homes and move into more manageable properties in resilient lifestyle or regional markets.  The key issue for this cohort is less about finance stress and more about timing, confidence and whether they believe current market conditions will improve over the next 6 to 12 months. Markets outside Sydney and Melbourne are still showing firmer momentum, with Perth up 6.8 per cent over the quarter, Brisbane 4.8 per cent and Adelaide 4.3 per cent, which supports demand in many down-sizer destinations.

Renters As landlords face increased mortgage repayments, insurance, and maintenance costs, these costs will likely be passed on where demand allows. Rental vacancies remain tight – particularly in Brisbane, Perth and Adelaide due to strong population growth and interstate migration. We may see renters increasingly seeking smaller properties, or moving further from city centres.

Landlords are likely to face mixed conditions.  Higher interest rates and more expensive fuel, insurance and maintenance will place further pressure on holding costs.  That may encourage some investors to lift rents where the market allows, or to review whether their property still delivers an acceptable return. Yet rental markets in many parts of Australia remain tight, which should continue to support investor demand in affordable capitals and key regional centres.  The larger risk is that prolonged oil price disruption keeps inflation elevated and delays any relief on interest rates, extending the period of higher ownership costs.  The RBA has said central banks typically look through temporary oil shocks, but persistent energy-led inflation can still complicate the outlook for rates.

For more information, contact:

Stewart Bunn, Communications & Corporate Affairs Manager on 0413 624 317