Have we already reached peak inflation? and what might this mean for the property market

With the price rises of lettuce, petrol, building materials, wages, rents, and just about anything you can think of lately, the topic of inflation keeps popping up the standard response by the worlds central banks (in our case the RBA) is to raise rates.

In past cycles, real estate prices have tended to continue to rise even as interest rates increase. This is because the fundamental driver was a demand-side push.

This time growth has slowed and even reversed in about 40% of the market nationally, primarily in the premium suburbs.

As we have been saying, the difference this time is that price rises aren’t a result of excess demand.

They’re a result of a supply-side shock stemming from the rolling pandemic lockdowns and the war in Ukraine. The rate rises have been killing demand where the real issue has been a supply shortage.

However, the case for the economy to be approaching peak inflation keeps getting stronger...

Gavin Chau is an Economist and the Senior Research Analyst at Blue Wealth Property and joins us in the studio.

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