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In the Chinese zodiac, 2025 was the Year of the Snake, traditionally associated with wisdom, diligence and strategy.
Conveyancers and other property professionals certainly had to call on those characteristics and more, in the past 12 months. The most pressing topic for many was the looming Tranche 2 AML/CTF regime.
The Australian Conveyancer assigned many pages to the subject, including interviews and a podcast with AUSTRAC chief executive Brendan Thomas.
§ Take it easy
Thomas promised industry-specific starter packs by the end of January, and says the focus is on money-laundering criminals, not small businesses trying to do the right thing.
“We want to make this transition as easy as possible,” Thomas told the AC. “We don’t expect you to do it alone.”
Other hot issues included fees, indemnity insurance, interoperability of e-conveyancing, Senate hearings, the roles of ARNECC and PEXA, training for junior conveyancers and Queensland’s new seller disclosure rules.
Of wider interest were government housing targets, state and federal help for first-home buyers, the house price boom, interest rates, climate change and global economic instability.
§ Food tariffs get the chop
That last concern appears to have eased somewhat, in part thanks to US President Donald Trump’s removal of tariffs on Australian beef and other agricultural exports to the United States.
But the US still dictates a 50% tariff on Australian steel and aluminium imports.
Prime Minister Anthony Albanese said his government would continue “to advocate for genuine reciprocal tariffs, which would be zero.”
§ Optimism surges
Last month’s Westpac-Melbourne Institute Consumer Sentiment Index showed a 12.8% surge to 103.8. (A number above 100 means optimists outnumber pessimists). That was its first positive result since February 2022 and a seven-year high, excluding the COVID period.
“This is an extraordinary and somewhat surprising result,” commented Westpac’s Head of Australian Macro-Forecasting, Matthew Hassan.
“Domestically, there are clearer signs that a recovery is gaining momentum, especially around consumer demand and housing markets.
“External threats also appear to have eased with a de-escalation of US–China trade tensions and recent meetings between Australia and the US resulting in a new deal on the supply of critical minerals and rare earths. The real surprise, though, is how much these positives have outweighed renewed concerns about inflation and the outlook for interest rates.”
§ Merry Christmas?
For retailers, ‘tis the season to be jolly, maybe. Westpac found just over 35% of consumers plan to spend less on gifts than last year – a similar share to 2024. But 15% planned to spend more, up from 11.6% last year. That’s the “least restrained” spending intention since 2016, apart from the post-COVID boom of 2021.
§ $12 trillion homes
It’s been another bullish year in real estate, with housing values steaming ahead, especially in the three months to October.
Cotality’s November report noted that residential real estate underpins Australia’s wealth, with dwellings valued at $12 trillion, more than double the value seen a decade ago. That compares to $4.3 trillion in superannuation and $3.6 trillion in listed stocks.
Nationally, dwelling values were up 6.1% for the year, combined capitals up 5.6% and combined regionals 7.5%. Although they stand out in dollar terms, the annual increases in Sydney and Melbourne were lower at 4.0% and 3.3% respectively. The stars were Darwin, up 15.4% to a record high, Brisbane up 10.8%, Perth 9.4%, and Adelaide 6.7%
§ Houses vs units
Cotality also reported that the house price premium in Australia’s combined capitals has surged to a record $363,000, nearly 50% above median unit values. That’s good news for downsizers, bad for apartment dwellers hoping to upgrade to a house.
“We’re ushering a generation of first home buyers into apartments, but the data shows they won’t get the same capital gain,” Cotality’s Eliza Owen told domain.com.au.
“It makes it very hard for them to upgrade into a house. Over the past five years, total growth in house values has been 52%, and in units, cumulative growth was less than half of that at 23%.”
By the way, 2026 is the Year of the Horse: an animal associated with enthusiasm and energy.
By Sam McKeith
§ Reserve Bank’s 2025 interest rate cuts show taming inflation ‘rarely a quick process’
The RBA’s decision to cut interest rates three times in 2025 may have been premature and risks prompting a surge in inflation, an expert warns
The Reserve Bank of Australia’s delivery of three interest rate cuts in 2025 could prompt inflation to accelerate in 2026, an academic says.
The central bank in August handed down its third interest rate cut of the year, with a 0.25 percentage point reduction taking the cash rate to 3.6 per cent. The move, which came after cuts in May and February, took the cash rate to its lowest level since April 2023.
Robert Bianchi, from Griffith University Business School, said the RBA appeared confident that inflation was under control by mid-2025, but the outlook shifted unexpectedly over the past four weeks as latest inflation data exceeded the RBA’s 2–3% target range.
“History reminds us that taming inflation is rarely a quick process,” Bianchi said.
“When the RBA opted to ease monetary policy earlier this year, it was responding to a soft domestic economy and mounting cost-of-living pressures on households.
“At the time, reducing the cash rate by 75 basis points appeared to strike an appropriate balance, that is, supporting economic activity without reigniting excessive property market growth. As we close out the year, the outlook has shifted.”
He said with inflation now above target, the probability of near-term rate cuts was “effectively zero”, with the RBA to hold off easing until inflation returned to the 2-3% range.
According to Bianchi, criticism that the central bank acted too late in cutting rates this year is unwarranted. He points to political pressure on the RBA to move on rates before the May federal election, which he says may have influenced the timing of the cuts.
Rather, recent inflation data suggested the decisions to ease policy in 2025 may have been premature, potentially setting the stage for inflation to re-accelerate in 2026, he said.
Official data showed monthly consumer price index (CPI) in October jumped 3.8% from a year earlier, the highest in 10 months and exceeding median forecasts of 3.6%.
“Current market pricing reflects this risk, with expectations now pointing to a possible cash rate increase by the end of 2026, an outcome that policymakers and markets alike would prefer to avoid.”
In Bianchi’s view, Australia would continue to continues to face challenges in bringing inflation under control, particularly in areas such as residential rents, electricity costs, and government-administered prices.
“While progress has been made, it is clear that inflationary pressures persist, and we are not yet fully out of the woods,” he said.
MLC senior economist Bob Cunneen echoed the comments, saying Australian consumers were still being squeezed by inflation, high mortgage interest rates and rising rents. Australia’s lacklustre economy is confirmed by the subdued GDP result for the March quarter of 2025 that shows the economy expanded by barely 0.2% for the quarter and 1.3% for the past year.
“Essentially economic activity is only just registering a pulse,” he said, adding that the RBA’s rate cuts this year was “a silver lining in this dark cloud”.
“The RBA’s February and May 2025 interest rate cuts and expectations for more later in 2025 is giving some solace to consumers amongst these difficult times,” Cunneen said.
“More encouraging and remarkable is that Australia is recording strong jobs growth even with subdued economic activity. In the year to May 2025, circa 362,000 new jobs were generated in Australia,” he added.
Tony Xia, principal of national mortgage broker firm The Mortgage Agency, said conditions had been challenging for thousands of Australians with mortgages.
“Looking back at how 2025 played out, it’s been a tough year for anyone with a home loan. We all had high hopes when the banks forecasted up to six rate cuts, so landing on only three has been disappointing,” Xia said.
“The reality is that stubborn inflation is really hurting households, and it’s the single biggest factor driving the RBA’s decisions. As we head into 2026, I think we should buckle up for more of the same. It’ll be a bit of a rollercoaster - good news one week, bad news the next - depending on inflation numbers.”
Xia predicted the property market “to really steam up across the country”.
“We’re going to see a wave of activity from the First Home Guarantee Scheme early next year, alongside investors eager to build wealth and are willing to spend more to do it,” he said.
By Sam McKeith
§ Housing Minister INSISTS launch of HELP TO BUY scheme on track for CY25
The federal government maintains a key affordable housing initiative will be open for applications by the end of the year, amid reports of a review of the scheme
The launch of the federal government’s much-anticipated shared equity housing scheme is on track for 2025, the housing minister says, amid a reported review of the scheme.
Under the initiative, announced in March, the government will contribute up to 40 per cent of the purchase price for new homes or 30 per cent of existing homes for eligible borrowers.
The scheme, which will have 10,000 places available per year over four years, caps property prices in capital cities, with Sydney offering the highest cap at $1.3 million.
Applicants must have an annual taxable income of less than $100,000 or $160,000 for joint applicants, and contribute at least a 2 per cent deposit of the home purchase price.
An official review of scheme was launched in September with lenders expected to commence on the scheme’s panel from March 2026, according to local media reports, prompting speculation online that the initiative’s rollout may be delayed.
In a statement, a spokesperson for Housing Minister Clare O’Neil insisted that the scheme, expanded as a key pre-election pledge, “will open later this year.”
“Help to Buy is a modest but meaningful program to help 10,000 working Australians each year get into a home of their own with a smaller deposit and lower repayments,” the spokesperson told Australian Conveyancer.
Cameron Kusher, director of property consultancy Kusher Consulting, said irrespective of when the scheme commenced, its popularity would probably take a hit from would-be buyers preferring the government’s 5 per cent deposit scheme.
That scheme, launched in October and formerly known as the Home Guarantee Scheme, enables most first home buyers to purchase a home with a deposit as low as 5 per cent, without the need to pay Lenders Mortgage Insurance.
“It has no caps on spaces, it has no income caps and the price caps are actually higher than the Help to Buy scheme,” Kusher said. “If you had this scheme in place first before the Home Guarantee Scheme then you would probably get more people using this.
“I think for many the preference would be to try to get into the Home Guarantee Scheme rather than the Help to Buy scheme because it’s your own property. ”
Both schemes were flawed, he said, as they “basically assist or enable people to enter the market at higher prices rather than addressing the fact that housing is expensive and that’s the underlying issue”.
“To make it easier for first home buyers we need to make housing more affordable.”
According to Kusher, the success of the Help to Buy scheme “is going to be about how comfortable people are about sharing the upside and the downside of the market with the government, and probably it also comes back to their desperation to get into housing”.
“With the Help to Buy scheme, assuming that prices continue to rise, you’re going to have to give some of that profit away when you do sell that property,” he said. “If property prices fell obviously the government does wear some of that cost as well.”
Joseph Daoud, an independent economist and It’s Simple Finance founder, expected the scheme to be popular on launch given property prices across Australia continued to rise.
“There will be interest from some first-home buyers,” he said.
Australia’s housing market continued its upswing in October, with national home prices rising 1.1 per cent, the strongest monthly lift since June 2023, according to Commonwealth Bank data released earlier this month.
However, Daoud said there would likely be caution from some in the cohort about sharing equity with the government.
“Co-owning a home with the government raises questions about future decision-making and exit strategies, so I’d want anyone considering the scheme to think carefully about those implications,” he said.
In his view, the scheme was a “negative fix born out of years of red tape and a shortage of new housing”.
“It’s an intervention, but not one that tackles the root problem. My concern is that using taxpayer funds to co-purchase homes boosts buying power without increasing supply, which can push prices higher,” he said.
“Instead of concentrating on increasing housing supply, they’re rolling out band-aid fixes to help people purchase property. Australia’s housing affordability problem isn’t just about the cost of living; it’s also about a severe shortage of homes.
“I’d like to see a bolder approach that tackles supply head-on: streamline planning approvals, review restrictive zoning, invest in infrastructure and accelerate construction.”
§ Young Aussies ditching home ownership for holidays
By Melissa Iaria
There’s a cultural shift away from the traditional “Aussie dream” of owning your own home towards valuing travel and life experiences instead
The rising cost of buying a home is leading many younger Aussies to ditch the dream of home ownership in favour of travel and lifestyle perks.
Over the past decade, the average home loan nationally has soared from $390,000 in June 2015 to $678,000 in June 2025, Australian Bureau of Statistics figures show. At the same time, home ownership rates among younger generations are declining: in 1971, the rate for 25 to 29-year-olds was 50 per cent, but by 2021 this fell to 36 per cent. For 30 to 34-year-olds, the rate fell from 64 per cent in 1971 to 50 per cent in 2021, according to a 2024 Senate report.
Younger Australians appear to be shelving their aspirations to buy, with a survey earlier this year revealing 45 per cent of Australian adults aged 18 to 44 were prioritising spending on travel over home ownership, according to Southern Cross Travel Insurance.
“Younger generations seem to be embodying the ‘she’ll be right’ attitude, comfortable to cut their losses when it comes to the housing market in order to seek adventure,” the insurer’s CEO Jo McCauley said of the findings. The trend was reinforced by a 2025 money.com.au survey that found most Aussies - 25 per cent - were saving for travel over the 12 per cent saving for a house.
With Cotality data showing capital city dwelling values up by 5.9 per cent or around $53,700 since February, house price inflation appears to be hampering first home buyers from entering the market. Yet at the same time Aussies are splashing more on overseas travel, splurging $78.4 billion in 2023-24, up $22.7 billion on the previous year, according to Tourism Research Australia.
We’re also travelling more. The number of Australians returning from short-term overseas trips rose 6 per cent year-on-year to 972,070 in August 2025, the Australian Bureau of Statistics says.
ING reports the average Aussie spends about $7,385 on a two-week trip - higher than the average initial monthly loan repayment of $3961 over 30 years according to money.com.au. Looking ahead, the trend of priced-out young Aussies choosing adventure over home ownership does not appear to be waning.
According to the Southern Cross Travel Insurance survey, 91 per cent of Australians planned to travel in the next 12 months, with Gen Z and Millennials leading the charge at 59 per cent and 61 per cent respectively, compared to Gen X at 43 per cent and Baby Boomers, 41 per cent.
§ Homebuyers at square one as price hikes eat rate cuts
By Jacob Shteyman
A slowdown in the bellwether housing markets of Sydney and Melbourne suggests that sentiment is starting to sour as hopes of more interest rate cuts dissipate
Surging home prices have wiped away the benefits of three interest rate cuts to new buyers, new data reveals.
Across Australia, home values grew by one per cent in November with the median dwelling now worth $888,941, property analytics firm Cotality reported on Monday.
That follows a blistering result in October, when prices rose at 1.1 per cent rise, and 0.8 per cent in September.
However, Cotality research director Tim Lawless said the slightly reduced November figure could signal a shift in momentum.
“It really looks to be a very mixed result, two-speed market that’s starting to emerge once again,” Cotality research director Tim Lawless said.
On a monthly basis, growth in Sydney slowed from 0.7 per cent to 0.5 per cent, while Melbourne fell from 0.9 per cent in October to 0.3 per cent in November.
Meanwhile, the mid-sized capitals picked up.
Brisbane became the second Australian city to break the $1 million median home price barrier, up 1.9 per cent to $1,015,767, with Adelaide up by the same amount and Perth accelerating to 2.4 per cent.
Price growth in Canberra, Hobart and Darwin also grew up by one per cent, 1.2 per cent and 1.9 per cent respectively.
The housing price rises come at the same time as a resurgence in inflation, dashing hopes the Reserve Bank will cut interest rates again.
Economists and bonds traders are increasingly predicting that the central bank could even hike rates next year.
“You’d have to argue Sydney’s affordability and serviceability challenges will be shining through here and probably putting a natural ceiling on how high prices can go,” Lawless said.
“This may be the first sign that the markets are starting to respond to this renewed acceptance that interest rates aren’t likely to fall further from here, at least over the next six months.”
Already, the impact of 75 basis points of cash rate cuts since February are wearing out.
Lawless calculated the cuts increased the borrowing capacity of a median income household by $55,000, but home values have since risen by $60,000.
For renters, the outlook continues to be one of worsening affordability. Rents are rising across every capital city, with the national rental index 5 per cent higher over the past 12 months - the highest annual rate of growth in a year.
“It’s definitely bad news for renters, and it comes at a time when vacancy rates are just holding around that 1.5 per cent mark, which is virtually at record lows,” Lawless said.
Australia faces an ongoing supply shortfall and feasibility constraints for developers are hampering government policies to boost the stocks of social and affordable housing and build-to-rent.
Demand is expected to soften somewhat as migration levels normalise and renters increasingly form larger household sizes or stay in the family home longer to accommodate higher rents.
§ RBA to wait longer to cut rates in 2026 amid ongoing housing supply shortage: experts
By Sam McKeith
The RBA is unlikely to cut interest rates until late in 2026 on inflation worries, experts say, presenting new challenges and opportunities in the nation’s squeezed housing market
Inflation concerns are on the rise in Australia, prompting experts to push back their expectations for the Reserve Bank to cut interest rate cuts in 2026, as the nation looks set to endure a continued shortfall of affordable housing.
Some economists now even tip the central bank to hike rates by mid next year, following official data showing inflation lifted to 3.8% in October, above a market consensus of 3.6%.
The forecast come after the RBA trimmed the cash rate three times in 2025 to 3.6%, but indicated in November that persistent inflationary pressures could end the easing cycle.
AMP Deputy Chief Economist Diana Mousina said that forward-looking price indicators and business surveys were “a little softer” on inflation looking ahead.
“An elevated, and increasing, unemployment rate will put downward pressure on wages growth and should help to ease services inflation. We expect trimmed mean inflation to be around 2.5% by the second half of 2026,” Mousina said.
She said inflation pressures added to existing RBA bias to keep interest rates on hold.
“The components in the figures show that pockets of services inflation are still too high,” Mousina said.
“Our view has been that further interest rate relief is likely in Australia because of our expectation that inflation will slow from here and the unemployment rate will remain at 4.5% or a touch above.
“We had been expecting another rate cut in May 2026 but it may occur later as the inflation figures seem to keep surprising higher.”
Meanwhile, the Commonwealth Bank said in recent guidance that it expected rates to hold at 3.6% in 2026. It said that result, if it occurred, would mean mortgage holders missed out on near-term repayment relief, but gained interest rate stability to help them plan ahead.
The RBA, in its November statement on monetary policy, said it decided to leave rates unchanged due to evidence of inflationary pressure in the economy, pointing to prices back above its 2-3% target range and “where we expect it to stay for a while”.
“We expect inflation to be above 3% for much of next year before declining to around the middle of our target range by late 2027,” the RBA statement said.
In Melbourne, Rocky Rana, founder of property buyers agency The Realta, said he expected the cash rate to “remain broadly anchored in the mid-3% range in 2026, with limited room for cuts unless the labour market weakens materially”.
“Rather than a rapid easing cycle, the RBA is likely to hold a ‘higher for longer’ stance to avoid reigniting inflation through housing and services demand,” Rana said.
“The first-home owner policies are expected to serve a complementary role in meeting housing goals for the government. This key stat can be worked around from the fixed-rate home loans on offer at present in the market.”
Despite increasing inflationary concerns and revisions to cash rate forecasts, Rana expected the real estate market, especially in Melbourne, to remain buoyant through next year.
He said population growth continued to outpace new construction and vacancy rates remained low, meaning that housing pressures would last into 2026.
“Next year won’t deliver a big rate-cut party, however, we expect further rate cuts whenever we see the inflation numbers in control and the property market is expected to grind higher because of chronic undersupply and tight rentals,” he said.
“In Melbourne especially, quality family homes and townhouses will outperform and properties which are priced in the entry level for first-home owners will continue to see more activity than 2025 across the region.”
Diana Sarcasmo, managing director of residential at Colliers, also downplayed monetary policy, saying affordability challenges and supply constraints would shape the property market in 2026.
She said the market presented different opportunities, depending on location.
“Melbourne and Canberra are entering a recovery phase, offering compelling value and strong rental yields for investors,” Sarcasmo said.
“Brisbane’s growth story continues, underpinned by infrastructure and Olympic-driven demand, though supply will remain a key challenge. In Sydney, apartment stock, priced to take advantage of government incentives, particularly one- and two-bedroom options, will outperform, while growth corridors in the west and south-west will attract buyers seeking affordability.”
“With rental pressures persisting, we expect more Australians to embrace ‘rent-vesting’ as a strategy to balance lifestyle and investment goals.”
By Richard Cunningham
§ AUSTRAC starter packs ON TRACK
User-friendly guides to help newly regulated small businesses establish compliance programs with minimal fuss
They didn’t make it in time for Santa’s sack, but financial regulator AUSTRAC does have some belated Christmas presents for conveyancers: the AML/CTF Starter Packs, gift-wrapped guides to the Tranche 2 Anti-Money Laundering regime.
As he indicated in the AC’s inaugural Settlement Day podcast, AUSTRAC chief Brendan Thomas says they’ll be released at the end of January.
“The starter programs will outline what a typical low-risk, low-complexity conveyancing practice needs to do,” Thomas said.
Practitioners don’t have to be rocket scientists: the kits are “technology neutral” and designed to be as user-friendly as possible.
Nor will they need new staff or engage a third-party provider to write their compliance program.
All they need, is to download the relevant form from AUSTRAC’s website and customise it to suit their practice. If help is needed, there’ll be a dedicated contact centre.
And it’s not just conveyancers who can breathe easier. Accountants, lawyers, real estate agents and jewellers will all get customised packs.
Thomas says AUSTRAC consulted with hundreds of stakeholders, and most of the feedback from conveyancers has been incorporated.
That includes:
Removal of the need to conduct beneficial ownership checks on low-risk entities, like publicly listed companies.
Narrowing the scope of domestic “politically exposed persons,” making the requirement easier to implement.
Greater clarity on the Know Your Customer (KYC) information to be collected, broken down by customer type.
The aim, said Thomas, is to “minimise the work that a typical small practice needs to do.”
That doesn’t mean you can kick back and relax until March 31, when AML/CTF enrolment begins.
“Firstly, you can read what you can do to get ready,” Thomas said.
“Next, you can register for our webinars. You can also speak to your peak bodies about what to expect from the changes.”
There’ll be a stream of educational material on the AUSTRAC site. Not only webinars, but e-learning modules, fact sheets, videos and animations.
You can also enrol via the website. As noted, that starts from March 31 but must be done by July 29 at the latest.
If you provide a designated service after July 29 without being enrolled, you breach the law. Financial penalties apply and will accrue each day you remain in breach.
But as Thomas has stressed in these pages and on the Settlement Day podcast, AUSTRAC doesn’t seek to punish hardworking conveyancers.
“The AML/CTF laws do not require perfection,” he said. “They require businesses to mitigate and manage risks.
“Does the practice understand the risks it faces and have an appropriate AML/CTF program?
“Has it followed the program? Has it reported where it needs to? Does it have records to show that?”
Those records - and any reports of suspicious activity submitted to AUSTRAC – will remain strictly confidential.
For more details, visit www.austrac.gov.au/about-us/amlctf-reform