Oil prices up, construction costs up, confidence down!
Pete Wargent and Chris Bates unpack a fast-moving week for property: surging fuel costs, rising inflation risk, collapsing confidence, and what all of that means for rates, building activity, listings, and buyer behaviour. The episode matters because the pressure is no longer theoretical — it is already hitting development feasibility, rental supply, and decision-making across the market.
Together they discuss
- Diesel has surged to roughly $3 per litre, with Australia especially exposed to fuel shocks; Pete notes this is already flowing through to transport, airfares, freight, food, and service pricing.
- February inflation came in at 3.7% headline and 3.3% core, but both hosts stress that this was effectively pre-conflict data, with much bigger inflation impacts still to come through fuel and housing costs.
- Consumer sentiment is at its weakest since 1973, services PMI dropped from 52.8 to 46.2, and market pricing has shifted toward a terminal cash rate of about 4.65% by December. Pete also notes bond yields spiked to 4.9% before easing back.
- First-home buyers are still transacting despite the nerves, helped by the 5% deposit scheme and a strong desire to exit the rental market. Chris says his team had six first-home buyers purchase in a week, even as investors begin to look more fragile.
- The market is splitting: premium property has cooled, particularly in Sydney and Melbourne, while the lower end remains highly competitive. Pete says he is still seeing no evidence of declines at entry-level price points, even as high-end sentiment weakens.
- Development feasibility is deteriorating fast. Pete cites producer-price inputs like copper pipes and tiles up 82% since 2019, and notes luxury apartment construction costs have risen by about $125,000. Both hosts mention clients cancelling developments because they would now lose money by building.
- Builders are under renewed strain and profit incentive worries: new home sales fell in March, insolvencies are rising
- Listener Q&A: fixing part of a mortgage in a rising-rate environment, and whether a much larger inherited deposit should change ownership percentages inside a marriage.
