Bendigo Bank's chief economist warns slowing growth, rising unemployment and persistent inflation are reshaping Australia's property and lending outlook
Australia's economy has entered a period of stress, with cooling jobs growth, stubborn inflation, and global energy volatility combining to slow output and reshape the country's property market, according to David Robertson (pictured), chief economist at Bendigo Bank.
Robertson's assessment follows the release of a cluster of economic indicators that have created something of a high-stakes tightrope walk for mortgage professionals, borrowers, and lenders.
"As we have been forecasting for many months now, we are seeing an expected slowing in the economy as three Reserve Bank of Australia rate hikes, high energy prices, and global uncertainty weigh on demand,” Robertson said.
The latest unemployment data showed the jobless rate rising to 4.5% – a development Robertson described as confirmation that the labour market is beginning to turn.
While headline inflation eased to 4.2%, core inflation moved higher. This, combined with a 4.75% award wage increase announced earlier this week, “will keep pressure on the RBA to maintain restrictive rates, especially given Australia's lack of productivity growth”.
Economic growth, meanwhile, is forecast to slow to 1.5%, with the trajectory dependent on both the duration of the conflict in the Middle East and the resilience of household spending.
Bendigo Bank's base case remains that the RBA will hold the official cash rate steady at its next meeting. However, Robertson cautioned that one further hike this cycle – potentially in November – remains on the table if oil prices stay elevated and global conditions do not improve.
"After peaking at $125 a month ago, oil has returned to below US$100 per barrel," Robertson noted. "The rise in petrol and diesel prices, alongside shortages in key inputs like fertilisers, will continue to weigh on the economy. While household spending has held up thus far, this uncertainty and cost-of-living pressures have pushed consumer sentiment to a record low."
Property market faces a cooler outlook
Auction clearance rates were already declining before the federal budget, and Robertson expects further softening ahead – pointing to flat or marginally negative house price growth across major capital cities in 2026.
"Sydney and Melbourne are already seeing small declines, while other capitals, and regional property, have been more resilient," he said. "In contrast to the average 9% house price increases last year, 2026's market may be closer to flat in many locations."
Read more: Has the housing market downturn arrived?
Robertson acknowledged the government's proposed tax changes targeting residential property remain a live debate, and that stabilising prices may serve the stated housing affordability objective – but stressed that supply-side reform and productivity gains remain the deeper structural challenge.
“As we have argued here for many years, we do need bold structural reform including tax reform to lift productivity, so that higher wages growth can occur without feeding back into inflation. But, the jury is out as to whether this can all be achieved without adjusting GST, to lower our dependence on personal income tax,” Robertson said.
