Industry body calls for government enquiry to address housing crisis
The housing affordability crisis demands attention now, as values are on the move again, REINSW says
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A leading real estate industry body has called for a government enquiry to address ‘skyrocketing housing demand’.
CEO of the Real Estate Institute of NSW, Tim McKibbin said the contrast between the demand for housing and the available stock is already at ‘critical’ levels – and is only set to get worse.
“REINSW is calling for an immediate and expeditious Inquiry into the inhibitors of supply and then a brutal action plan involving industry and Government to implement the recommendations,” Mr McKibbin said.
“The community is sick of all the talk on this issue. It’s time for action and this means government and industry working together now.”
Homebuyers unable to find a property at their price point have remained in the rental market, where a lack of supply is putting further pressure on rental prices, which have soared 10.2 percent in the past year.
Data from PropTrack has shown rental vacancy rates were at an historic low in March this year. As rental properties become available and have been quickly leased, landlords have had the opportunity to increase rent, further impacting households’ ability to save for a deposit.
In capital cities, rents have risen 13 percent year-on-year, while in regional areas, rents have gone up by 4.5 percent.
CoreLogic reported house values are also on the move, which Mr McKibbin said put the goal of buying a home further out of reach.
“Higher house prices and rents are an unavoidable market consequence of a housing shortfall, and without more social and affordable housing, increased homelessness is a catastrophic social consequence,” he said.
“There is already evidence of prices beginning to rebound and we need to remember that the bull-run through the pandemic typically pushed median prices up between 20 percent and 30 percent, depending on the area.
“The rebound in house prices is no surprise. The lack of supply is the primary enemy of affordability.”
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Strong consumer spending and tight supply have driven retail to the top of commercial property, but signs of pressure are starting to emerge.
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Australia’s retail property sector entered 2026 as the strongest performing commercial asset class, but rising geopolitical risks and cost pressures are beginning to test its resilience, according to new research from Knight Frank.
The latest Australian Retail Review shows the sector rode a wave of consumer spending and constrained supply through 2025, delivering total returns of 9.2 per cent and driving transaction volumes up 43 per cent year-on-year to $14.4 billion.
That momentum carried into early 2026, with around $3.6 billion in deals recorded in the first quarter alone.
“Retail clearly emerged as the standout commercial property performer in 2025,” said Knight Frank Senior Economist, Research & Consulting Alistair Read.
“Improving household spending, limited new supply and stronger leasing fundamentals combined to drive better income growth and renewed investor confidence in the sector.”
Spending rebound drives retail strength
A lift in household spending has been central to the sector’s performance. Consumer spending rose 4.6 per cent year-on-year to February 2026, supported by easing inflation and improving real incomes.
That shift flowed directly into retailer performance, with average EBIT margins across major retailers rising to 8.9 per cent in the first half of 2026, their strongest level in several years.
“Stronger consumer spending was critical in restoring momentum to the retail sector,” Mr Read said.
“Retailers have generally been better able to absorb costs, rebuild margins and support sustainable rental outcomes, particularly in higher-quality centres.”
Improved trading conditions also pushed leasing spreads up 4.2 per cent in 2025, reinforcing income growth and supporting capital values.
Geopolitical tensions begin to bite
But the outlook has become more complicated. The report warns that escalating conflict in the Middle East and its impact on fuel prices, supply chains and interest rates could weigh heavily on consumer spending.
“Higher fuel prices, flow-on cost pressures across supply chains, and recent interest rate increases are collectively squeezing household budgets, and early consumer sentiment data suggests confidence is already softening,” Mr Read said.
“While household balance sheets remain generally resilient, heightened uncertainty over future costs is likely to weigh on spending — particularly in discretionary categories — in the months ahead.”
The impact is already being felt in investment activity. While the year began strongly, transaction volumes slowed in March as investors paused amid the uncertainty.
“Early indicators suggest elevated uncertainty has already begun to affect the market. While retail investment enjoyed its strongest start to a year in a decade, with nearly $3 billion transacted by the end of February, activity stalled in March, as investors took a pause amid elevated uncertainty,” Mr Read said.
Solid foundations support medium-term outlook
Despite the near-term headwinds, Knight Frank maintains that the sector’s underlying fundamentals remain strong. Limited new supply, high construction costs and population growth are expected to continue supporting rental growth over the medium term.
“Retail has entered this period of uncertainty from a position of strength,” Mr Read said.
“Supply-side constraints, population growth and improving income fundamentals remain powerful structural supports for the sector.”
The report highlights several trends shaping the year ahead, including steady yields as interest rates rise, mounting pressure on tenant margins, continued outperformance of prime centres, the growing need for logistics integration, and risks linked to underinvestment in capital expenditure.
For now, retail remains a sector with momentum, but one increasingly at the mercy of forces far beyond the shopping centre.
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