War, Inflation & Property

The old (non) Chinese proverb of “May you live in interesting times” is especially relevant today as we review a world in some chaos. Neither a blessing nor a curse, it doesn’t feel like a welcome offering just now.

Predictions for the Australian, and indeed world, economy from just a couple of months ago have been completely upended by geopolitics and war. Not that long ago, almost all economists expected rates to fall over 2026. Now the debate is simply how high rates will go.

Likewise, expectations of price increases in Melbourne property have been quickly wound back and the upheaval in the middle east has dramatically raised the likelihood of a big jump in inflation. Increased petrol prices are just the beginning; but the impact on consumer confidence is immediate.

The outcome? Depending on how long this war drags on (and the signs aren’t good for a quick resolution), rates will be raised quickly, inflation will (still) jump and prices will either stagnate, at best, or slip back again. Interesting times…