A discussion of everything that matters, and the effects of the Middle East conflict, Markets, Metals, Aussie property and how the next 2 years might look for investors.
Australia right now is not in a classic demand-led boom, and not in a classic recession either. It is in a supply-constrained, asset-supportive, margin-compressive environment: growth has held up better than many expected, inflation has proven sticky enough for the RBA to raise the cash rate to 3.85% in February 2026, unemployment is still relatively low at 4.1%, and GDP grew 0.8% in the December 2025 quarter and 2.6% year-on-year.
That is not collapse. But it is also not “business as usual.” It is an economy where real pressure has shifted from demand weakness to cost structure, financing cost, and supply bottlenecks. The most important macro point for property is that monetary conditions are tightening again while housing supply remains structurally short. The RBA’s own February Statement says underlying inflation is expected to stay above the 2–3% target until early 2027, and the Board explicitly judged that the economy was “further from balance” than previously thought. In plain English: the central bank does not believe the inflation problem is fully solved, so credit is no longer on an easing path by default.
That creates the core Australian tension for the next two years:
Rates and costs pressure feasibility, but shortages support values. National dwelling approvals fell 7.2% in January 2026 to 14,564, with private-sector non-house approvals down 24.5%. Meanwhile, the National Housing Supply and Affordability Council’s 2025 report said gross new housing supply over the five-year Accord period is likely to be about 938,000 dwellings, implying a shortfall of roughly 262,000 versus the 1.2 million target. That is why prices can stay firm even while developers feel squeezed. So the story is not “everything is crashing,” and it is not “property only goes up.” The story is narrower and more practical: existing scarce housing in good locations can stay expensive, while new projects become harder to make stack up. That distinction matters enormously for a sub-$8m developer.
On the global side, the channels that matter most to Australia are not every geopolitical headline equally; they are the ones that move energy, shipping, credit spreads, and confidence. The current Middle East conflict has already pushed oil toward recent peaks with credible warnings it could go materially higher if Strait of Hormuz disruption persists.
Oil Supplies
For Australia, that matters because fuel flows quickly into transport, site logistics, materials movement, and headline inflation. Commonwealth Bank’s economics team said the most direct Australian transmission is via higher fuel prices lifting inflation in the short term, while the AICD notes transport has a meaningful CPI weight. Ukraine still matters less to Australian residential developers through a direct “war” lens than through the commodity, energy, fertilizer, shipping and general European risk-premium lens. Likewise, instability in parts of Mexico and South America matters mainly where it affects global supply chains, metals, energy, migration flows, or broad credit sentiment. The rule is simple: when global conflict lifts the price of oil, freight, insurance or credit, Australian small development margins get thinner even if local demand stays solid.
Fund Managers
On BlackRock restricting withdrawals, the fact is: BlackRock limited withdrawals in a $26 billion private credit fund after redemption requests exceeded the fund’s 5% quarterly limit; Reuters reported requests of about $1.2 billion, or 9.3% of NAV. That is meaningful because it highlights liquidity mismatch in semi-liquid private credit, not because it proves a general bank run. For Australian property, the takeaway is not panic — it is that credit providers globally are becoming more discriminating, and that matters for construction and mezzanine finance pricing.
Precious Metals
Gold and silver also need to be read carefully. Gold has not behaved as a simple one-way fear gauge this month; (Mar 2026) Reuters noted that during recent Middle East turmoil investors at times preferred US dollar cash, and gold actually softened in part of the move. Silver is even noisier: the Silver Institute expects a sixth straight annual market deficit in 2026, but that is not the same thing as saying there is a permanent retail “shortage” in every form everywhere. What it does say is that investors globally are still looking for hard-asset protection where they distrust fiat stability or future real rates. That tends to reinforce the cultural bid for Australian property, especially among higher-equity buyers.
Back to Australia.
The domestic macro picture is mixed but not disastrous. GDP has re-accelerated, the labour market is still reasonably tight, and business confidence is slightly positive, though business conditions and profitability have eased. Consumer sentiment, however, remains soft: the Westpac-Melbourne Institute index was 90.5 in February, and more than 80% of respondents expected rates to rise further over the next 12 months. That means households are cautious, but crucially, house-price expectations remain elevated. In other words, the public feels financially uncomfortable while still believing property will hold or rise. That is a very Australian combination.
That split in sentiment is why I would not describe the next two years as broadly bullish or bearish. I would call it:
Bullish for scarce, established housing in tightly held lifestyle markets.
Neutral-to-bearish for sloppy development feasibility.
Harsh on leveraged operators with thin contingencies.
Queensland Outlook
For Queensland specifically, the demand backdrop is still supportive. Queensland’s population rose by 97,944 in 2024–25, with 55,743 from net overseas migration and 21,595 from net interstate migration. That interstate inflow has moderated from the pandemic peak, but it is still positive and still relevant. Queensland is not relying on one narrow source of demand. That matters for the Sunshine Coast axis because it sits at the intersection of several structural demand pools: lifestyle migration, equity-rich downsizers, hybrid workers, affluent retirees, and constrained supply. For example, Noosa Council itself says the shire has a relatively small rental market, lost nearly 550 permanent rental dwellings between 2011 and 2021 despite added development, had 2,461 households in housing stress in 2021, saw median rent for a 3-bedroom house rise from $500 to $800 over the five years to 2025, and has vacancy rates below 2% in parts of the shire since 2020. It also has a state dwelling target of only 5,000 additional dwellings over 2021–2046, with over 80% intended to be low-rise attached housing. That is not an oversupplied market.
Development Risks
At the broader housing-market level, Cotality’s March 2026 Home Value Index shows national values up 0.8% in February, 2.1% over the first two months of 2026, and 13.8% year-on-year, with combined regional values outperforming combined capitals. Westpac also says Sydney and Melbourne are moderating while Brisbane remains comparatively strong, with supply still very tight and new dwelling supply unlikely to lift materially until well into 2027. That is supportive for Queensland pricing, but it also means replacement cost pressure can stay elevated.
The risk side for a developer is more operational than directional.
The biggest risks I would put at the top of the stack are:
1. Feasibility compression. Landowners still anchor to yesterday’s peak prices while finance, build cost, contingency and holding cost assumptions have all moved higher. Projects do not usually fail because the suburb is bad; they fail because the margin buffer was fantasy.
2. Builder and subcontractor fragility. ASIC’s insolvency data continues to show an elevated level of corporate failures, and construction has remained one of the most stressed sectors in recent years. Even where your own builder survives, subcontractor churn can hit program and cost.
3. Approval and policy delay risk. In constrained, high-amenity areas, planning friction matters as much as market direction. A project with a six-month timing miss can lose more value through carrying cost and redesign than through a modest sales-price wobble. Noosa’s own housing strategy acknowledges the shortage, but that does not mean all projects move quickly.
4. Energy and supply-chain shock. A steep oil move is not just a petrol story; it feeds freight, plant, deliveries, imported inputs and risk premia. If the Middle East disruption persists, that is a direct margin risk for live projects and fixed-price contracts.
5. Tax and charge creep. I would be careful about making this a purely partisan story, but the commercial reality is that developers and investors face rising frictional costs from land tax, infrastructure charges, insurance, labour compliance, and broader regulatory overhead. In Queensland, land tax remains a live cost for investors and state revenue from it is rising.
Monetary System
So, is the monetary system tightening amid all this chaos?
Yes, but not in a “credit seizure” sense.
It is tightening in the more ordinary but still painful sense: higher policy rates, stricter credit discipline, lower tolerance for weak feasibility, and less liquidity generosity in risk assets. The RBA’s February move to 3.85% and its inflation outlook say that clearly. The BlackRock episode reinforces that globally, the market is less willing to pretend illiquid assets are cash-like.
The Next Two Years
Australian property overall: modestly positive in nominal terms, uneven by segment.
Queensland lifestyle markets: firmer than the southern capitals on average, because of migration, supply scarcity and land constraints.
Small development: harder than many assume, because feasibility is hostage to build cost, time, debt service and exit-price discipline.
Signing land contracts for the next two years should consider all of the following:
- the site is in a proven micro-location with deep owner-occupier demand,
- the product is aimed at the upper-middle to premium local/lifestyle buyer rather than a speculative broad market,
- the deal still works with a material construction overrun and a slower sell-down,
- the contract structure gives time, options and diligence protection,
- and the margin is strong enough that the project does not need a perfect market to survive.
Developers need to be selective, not absent:
- smaller projects,
- simple approvals,
- shallow basements or no basements,
- standardised construction,
- staged settlements where possible,
- strong contingencies,
- and finance assumptions that are slightly harsher than today, not softer.
In that sense, the call is:
Bullish on good land over a multi-year horizon.
Cautious on paying too much for land in 2026 on the assumption that costs normalise quickly.
Defensive on project structuring.
