07 Oct
Last week may prove to be an important turning point for the Australian economy, and for the property market.
The Reserve Bank lifted interest rates again, just one day before the release of the latest inflation figures, as it continues its efforts to bring persistent inflation under control.
There is no question that inflation remains too high. But the conversation has shifted from whether inflation needs to come down to what is actually driving it – and whether interest rates alone can do the job.
REIP CEO Sadhana Smiles’ media commentary pointed out that the source of the current inflationary pressure matters: “Higher interest rates cannot lower the global price of oil. They can make mortgages more expensive and slow spending and hiring here at home.”
“Treasurer Jim Chalmers has identified global oil prices, and their flow-through to Australian petrol prices, as a significant contributor to current inflationary pressure. Higher interest rates can suppress domestic demand, but they have little influence over these external price pressures.
“What they can do is increase mortgage repayments, reduce household spending and place additional pressure on businesses and employment. For the property sector, those pressures are increasingly visible.”
Where the pressure is showing up
Recent Victorian rental data from Dynamic Methods shows that, in the six months to July 2026, arrears accounted for more than half of adjusted notices to vacate for houses in our dataset. At the same time, we are seeing some owners sell rental properties, particularly units.
For tenants, that can mean pressure from both directions: the increasing cost of maintaining a household budget and uncertainty over whether their home will remain part of the rental market.
For the real estate sector, what happens next matters. Further weakness in household finances has implications beyond mortgage stress. It can affect rental arrears, investor decisions, housing supply, consumer confidence and ultimately transaction activity.
“The response to inflation cannot rest on borrowers alone, particularly when earlier rate rises are still flowing through to household budgets.
“Government spending and weak productivity also need to remain part of the inflation discussion. The RBA has a mandate to return inflation to target, but it must also consider employment and the broader health of the economy. With unemployment at 4.6%, the balancing act is becoming increasingly delicate.
The consequences ultimately come back to individual households: if someone loses hours or a job, the impact does not stop at their mortgage. It reaches the rent payment, the weekly shop and every other bill waiting on the kitchen bench.” – Sadhana Smiles
The coming months will tell us whether last week marked a turning point in Australia’s inflation story – or whether households will be asked to absorb still more pressure before inflation is brought under control
Wellbeing under pressure too: early survey results
Our confidential MitchellPT and REIP Thriving through Change survey is still live, but early results show property professionals are feeling the pressure.
Less than a quarter of respondents feel in control and good about their capacity, while more than one in three are under significant pressure: 21.6 per cent feel stretched and 15.3 per cent say they’re close to burnout.
Financial stability is the biggest concern. Just 12.6 per cent feel very confident about their financial position, while 71 per cent nominated greater financial stability as most important to improving their experience of work.
Among the findings REIP CEO Sadhana Smiles is presenting at the PM Reach conference today are some encouraging signs: more than 80 per cent of respondents report clear work priorities, respectful behaviour and an average or strong connection to their team.
But there is room to improve. Almost a third are unsure about raising workload or wellbeing concerns, expect little support or wouldn’t feel safe doing so.
Beyond financial stability, respondents want more realistic workloads, better recognition, clearer communication during change and greater flexibility.
The message is clear: financial security matters, but so do the culture and conditions people experience at work every day.
The survey remains open. If you haven’t yet taken part, we’d love to hear from you.
REIP
Real Estate Industry Partners
