2025 was a very easy year to predict.
Let’s look back at what I said:
- There would be an election. There was. The Liberals were a confused shambles. Labor was returned in a landslide.
- Interest rates would fall. They did, three times.
- As a country, affordability would remain an issue. It did, and it is worse again.
- Melbourne is the third cheapest capital. I said buy, It’s now the fourth cheapest. The buy recommendation remains.
- That most people would do nothing. They did. I was quieter than normal until November, then it became busy. People, statistically, are surprisingly predictable.
So, what of the year ahead?
- Labor gets to implement anything they want to. They are, and inflation is rising. That’s just a fact.
- The Liberals are still a shambles. That’s just a fact – so Labor has a free pass.
- In an intractable bind, the Labor government has let almost every First Home Buyer into the market with a 5% deposit and price caps. It’s no surprise that in every capital city it’s almost impossible to buy anything under the price cap. Who would rationally expand demand, when it’s known there aren’t enough houses?
- Melbourne still represents a buying opportunity, in my opinion. I read my own advice and bought there in January, 12 months ago. It was a good decision.
- Most people will still do nothing. (because of interest rate uncertainty) So, buy if you can.
What of the background?
It is no surprise to me, given my physics background, that the transition to renewables is expensive. The politicians in charge of the transition have wilfully lied about this. That’s what I call it when you don’t tell the truth.
One of the key drivers of the inflation rise in the last quarter of 2025 was electricity, which feeds into every single produced good. It’s a double whammy. Labor cynically gave a rebate to influence inflation downwards pre-election. It worked. The Reserve Bank bought into it, and rates fell. The rebates have now come off, which influences inflation the other way.
Will the Reserve Bank raise rates as early as February?
Banks say yes. But the one-off hit to inflation will come off in September 2026. So will the Reserve hold its nerve, or respond to public comment by so-called experts?
I think the Reserve felt pressure to lower and did. I think there is pressure to raise from some quarters, and pressure not to from others.
I honestly don’t know what they will do. But my loan calculator tells you my best guess (at a worst case) to budget for. (Check it here.)
What I do know ?:
- You should sit still and budget wisely.
- You don’t fix your rate. Ask me and I’ll explain why. (Variable or Fixed? Which should you choose?)
If you are in the market to buy, you should act. Lack of supply will increase house prices this year.
If the Reserve Bank raises rates, it will annoy people who borrow, but not enough to mean they don’t need a bed to sleep in.
If you are looking towards the future and want income independent of the pension, most people massively underestimate how much super they need.
Investing in property using the principles of compounding and leverage works. Ask me how.
As always if you’d like advice tailored to your own personal circumstances please call or email me anytime… It’s what I’m here for.
Alan Heath
Mortgage Broker Brisbane