The latest Property Council data confirms all the major office markets remain oversupplied, with the suburban markets generally in a worse position than the CBDs.
Garima Sinha
The Q4 CPI data provoked a sharp reaction in markets, with the probability of a cash rate cut in February now priced in at 95%.
The Australian build-to-rent (BTR) market continues to grow and mature.
The construction industry is a critical sector of Australia’s economy, literally shaping the homes, workplaces, and infrastructure that define our cities and communities.
The solid rise in the trade balance in November was largely driven by stronger export values.
The rise in the unemployment rate in December does little to change the fact that the labour market is incredibly tight.
CPI inflation was weak once again in Q4, with the headline measure increasing by just 0.2% q/q. Inflation has now slowed to 2.4% y/y. The trimmed-mean measure increased by 0.5% q/q in Q4, which is an encouraging step down.
We expect Trump’s tariffs will reduce global trade values by more than 7% by 2030 compared to our pre-election forecasts.
The Australian government is currently developing the 2035 greenhouse gas emissions target as part of its Nationally Determined Contribution (NDC) submission required by the Paris Agreement. Countries who signed onto the Paris Agreement are expected to set a 2035 NDC target before COP30, which is slated to be held next year.
October was another solid month for retail sales, with turnover increasing 0.6% m/m. Sales growth was driven by household goods in October, with retailers reporting a strong response to discounting activity.
We think Australia’s growth prospects are set to improve in 2025. Lower inflation will be supportive of the growth outlook, although there is still only limited scope for policy easing next year.
The road infrastructure sector is facing a serious skills shortage, exacerbated by the impacts of COVID-19, increasing demands on transport projects, and rapid technological advancements.
Electricity construction activity continues to boom as Australia works towards its target of generating 82% of electricity from renewable sources by 2030.
Oxford Economics’ new proprietary business cycle indicator shows that real US construction spending is firmly in a decelerating growth phase.
Office property continues to be challenged globally by structural changes to occupier demand. This has impacted vacancy rates and rents and trigged large falls in capital values, to which Australia is not immune
The Federal government has changed tack on fiscal policy, signalling it will run a much easier stance of policy from next financial year.
The Australian labour market has outperformed expectations over the past two years. From a very tight starting point, employment has increased by 6.1%, and while the unemployment rate has risen, it remains low at 4.1%.
We’ve kept our GDP growth forecasts unchanged at 1.1% for 2024 and 2.0% for 2025. We’ve seen some signs the Australian economy is running a little hotter than we previously thought over the past month, which doesn’t bode well for its ongoing battle against inflation.
The government funded transportation infrastructure boom continues to support growth in engineering construction activity. Annual growth slowed to 6.4% over FY24 to be $34.9bn, the highest level on record. We expect activity to reach a cyclical peak of $36.9bn in FY26.
The wage price index increased by 0.8% q/q in Q3. Quarterly WPI growth has been steady at the same pace through 2024.
