The global sharemarkets have been on a roller coaster responding rapidly to shifting trade policies triggered by Trump's tariff announcements. While financial markets have experienced significant fluctuations over the past week, Australian residential real estate has maintained its characteristic stability, with national property values hitting new record highs in March. This relative consistency highlights one of property's enduring qualities - its tendency to move at a more measured pace through economic cycles, providing investors with a different risk profile compared to more volatile asset classes.
"While global equity markets experience significant volatility, Australian property continues to demonstrate its characteristic resilience," notes Godfrey Dinh, CEO of Futurerent. "Australia is particularly well-positioned right now, being levied with lower tariffs than other countries and economic stabilisers like currency adjustments helping maintain our competitive position globally. The equity markets move at lightning speed, and although we have an increasingly clear line of sight to interest rates falling by 1% over the next year and the writing is on the wall for a property boom, there are still incredible buying opportunities for investors."
Key Highlights
- Deutsche Bank forecasts accelerated a 50bps RBA rate cut in May, which today were walked back to a 25bps cut call
- Auction clearance rates strengthen to 70.7% across capital cities
- National property values hit new record highs in March, up 0.4% for the month
- National home values rose 0.7% over the rolling quarter (capitals up 0.5%, regions up 1.4%)
Economic Impact Expected to be Manageable
Australian Treasurer Jim Chalmers offered reassurance that while Trump's tariffs will slow Australia's economy, a recession is not expected: "Our Treasury is not expecting the Australian economy to go backwards. In fact, what we are forecasting... is for growth to continue to gather pace."
Australia appears strategically positioned to weather the storm, with Chalmers noting the country is "banking on an expected pickup in consumer spending thanks to slowing inflation and government tax cuts."
Rate Cuts Now Expected to Accelerate
The global economic uncertainty is reshaping interest rate expectations dramatically.
Deutsche Bank chief economist Phil O'Donaghoe has revised his forecast twice in the last three days: previously stating "unless the US administration tilts to an 'off ramp' within days on its tariff policy, we expect the RBA to lower rates by 50bps in May" and then today updating his call to a 25bps cut in May.
The market is increasingly aligned with this view and expecting the cash rate to fall from 4.1% to 3.0% by September this year. Following the recent market rout, traders are now betting there is a 20% probability that the RBA could cut by an outsized 50 basis points in May, with a total of four quarter-point rate cuts priced in for all of 2025.
The RBA's most recent meeting, where rates were held steady, was reportedly "dominated by discussions of global risks." However, the bank remains cautious about inflation, "wary that the surprising strength in the labour market would stoke inflationary pressures."
Mortgage rates are now expected to drop from 6% toward 5% by year-end, which will significantly boost borrowing capacity for homebuyers and investors alike, potentially injecting fresh momentum into the property market as affordability improves.
Bricks and Mortar: The Enduring Investment Case
As uncertainty grows, property's tangible nature becomes increasingly attractive.
Resolution Capital founder Andrew Parsons notes that real estate investment trusts are currently priced at "very undemanding" levels, "trading at below replacement costs, with low supply weighing on the sector. They aren't directly affected by tariffs. The Australian dollar weakness means the local sector is on sale."
While cautioning about corporate equities facing profit margin pressure, Parsons emphasises: "There's going to be greater scrutiny on real value and cashflows from business concepts that have been over-hyped and overpriced. Investors will view real estate as being relatively secure, and generating income to live on, not the reliance on fickle capital growth."
Recent data confirms what many market watchers are seeing on the ground – property investment activity is accelerating at its fastest pace since 2022.
"We've seen it again and again, when sharemarkets drop, many investors will swing towards property," explains Stuart Wemyss of Prosolution Private Clients.
Australian superannuation pioneer Garry Weaven highlighted the risks of overexposure to equities in the current climate: "I feel sorry for anyone who's chosen to be entirely invested in the sharemarket. I think that wouldn't have been a very wise decision." Though he expects markets to recover in the medium to long term, his comments reflect growing sentiment favoring diversification into property.
A Strong Five-Year Growth Story… But More to Come
CoreLogic's April Housing Chart Pack reveals that Australian home values have increased 39.1% over the past five years, adding approximately $230,000 to the median dwelling value.
Kaytlin Ezzy, Economist for CoreLogic (soon rebranding to Cotality), explains this growth: "Outside of a few short months of declines, values have seen strong upward pressure over the past five years, driven by low stock levels and increased demand."
While impressive, this growth remains moderate compared to historical peaks:
- Late 1980s: National values jumped 75.5% over five years to March 1989
- Early 2000s: Record 79.7% growth in the five years to December 2003
"Although the increase seen over the past five years is relatively mild in percentage terms, in dollar terms, the recent rise far outperforms the historic peaks," notes Ezzy.
For indebted homeowners, rate cuts simply make mortgages easier to service. But for investors, the equation transforms dramatically.
Australia's Unique Position in the Global Trade Dispute
The escalating trade tension between the world's two largest economies has sent shockwaves through global markets, with Donald Trump threatening to increase tariffs on Chinese goods to more than 115% unless Beijing withdraws its retaliatory 34% levy on US goods. China has vowed to "fight till the end," raising fears of a prolonged trade war. Yet amid this confrontation, Australia finds itself in a strategically advantageous position that could benefit its property sector.
The Australian dollar hit a five-year low of US59.12c on Wednesday, driven by global trade tensions and expected rate cuts. On the bright side, a weaker dollar makes Australian exports more competitive, boosting key sectors like agriculture, manufacturing, education, and tourism. This could help support GDP growth and cushion Australia against global economic challenges.
The current trade tensions could create several strategic advantages for Australia:
- Export Competitiveness: Australian products gain advantage where US goods face new tariffs
- Market Share Opportunities: Chance to capture market segments from both US and Chinese exporters
- Resource Demand: Potential increased demand for Australian resources if US manufacturing expands
- Trading Partner Stability: Australia's reputation as a reliable trading partner becomes more valuable
- Currency Advantage: Weaker AUD improves export competitiveness globally
- FTA Value: Australia's existing free trade agreements become strategic assets
Industry analysts suggest China may respond with domestic stimulus. As Ox Capital's Mr. Lai notes: "I think the reaction is they will actually do more domestic stimulation or encourage domestic consumption... They will try to encourage that and they will try to stabilise the property market even more." Such a response could benefit Australia's resource sector.
Additionally, Cameron Robertson, Platinum Asset Management's portfolio manager for Asia strategies, suggests tariffs "may not be in play over the long term," with the EU already indicating a willingness to negotiate.
For Australia, stimulus discussions remain premature while inflation concerns persist. Markets expect the RBA to maintain its path of gradual rate reductions, with a cut anticipated at the May 20 meeting.
Auction Markets Strengthen Despite Global Uncertainty
Last week's auction results paint a picture of resilience amid international turbulence:
- Total Auctions: 2,532 across combined capitals (down from 2,873 prior week but up from 1,985 same time last year)
- Clearance Rate: Preliminary rate strengthened to 70.7% – highest in six weeks and first time above 70% since February 23rd
- Melbourne Performance: 1,192 auctions with 72.9% clearance (highest since July last year)
- Sydney Results: 943 auctions achieving 69.1% clearance (up from 65.5% but below mid-February peak of 76.6%)
Most capital cities recorded improved clearance rates, showing broad-based market strength despite global market volatility.
Looking ahead, auction volumes are expected to increase to approximately 2,860 this week before dropping sharply to around 550 next week due to the Easter holiday period.
Strategic Opportunities for Property Investors
The current market environment creates specific strategic considerations for investors:
1. Counter-Cyclical Timing
With share markets experiencing unprecedented volatility, property's steady performance offers relative stability. The initial stages of a rate-cutting cycle historically favour property investment.
2. Yield Focus
As property values reach new highs, cash flow becomes increasingly critical. Target areas with supply constraints and strong rental demand to maximise both yield and growth potential.
3. Metropolitan Recovery
Major capitals are showing renewed momentum after a period of underperformance compared to regional and smaller capital cities.
4. Strategic Timing
The window between initial rate cuts and increased competition provides a potential opportunity before further rate reductions drive increased buyer activity.
Looking Ahead: What's Next for Australian Property?
As global economic uncertainties continue to unfold, Australian property appears well-positioned to maintain its defensive characteristics.
The combination of improving auction clearance rates, and anticipated interest rate reductions creates a potentially favourable environment for strategic property investment despite broader economic challenges.
"The stage is set for a very strong year of capital growth for Australia’s property market," says Godfrey Dinh, CEO of Futurerent. "With faster and deeper rate cuts than anticipated, we expect a 15-20% price bump this year which is a more aggressive view than most forecasters had at the start of 2025 . This creates a unique opportunity for investors to take advantage of a slower moving market, where price gains are easily predictable and able to be capitalised on."
CoreLogic estimates there were 42,553 sales nationally in March, taking the rolling 12-month count to 528,212. While this is 2.1% below the recent peak record in December (539,743), the annual measure is up 4.6% compared to last year, and 4.1% above the previous five-year average—solid evidence of the market's underlying strength even amid global uncertainty.
For investors navigating these complex market conditions, focusing on quality assets in supply-constrained locations with robust fundamentals may help optimise investment performance as international economic conditions continue to evolve.
How Futurerent Can Help You Capitalise on Current Opportunities
With property markets showing signs of stabilisation and potential rate changes on the horizon, many investors are reviewing their portfolios and considering their options in today's evolving landscape.
Futurerent enables property investors to:
- Access to up to $100,000 per property (maximum $500,000 across your portfolio)
- Flexibility to act on opportunities that align with your investment strategy
- Funds for property improvements that may enhance rental appeal
- Options to maintain liquidity while managing your investment portfolio
- Alternative financing solutions alongside traditional lending options
Thorough research and professional advice remain essential for making informed investment decisions in any market environment. Contact our team today to discuss how we can support your investment strategy and achieve your goals.
Disclaimer: This market update is provided for general information purposes only and does not constitute financial advice. The information presented is based on data available at the time of writing and may not reflect current market conditions. Past performance is not necessarily indicative of future results. All investments, including property, involve risk and can decrease as well as increase in value. Before making any investment decision, readers should consult with a qualified financial advisor to assess their individual financial situation and investment objectives. Futurerent does not guarantee any particular investment outcome or market performance.
