28/03/2026
Two rate hikes in two months. A Senate report recommending changes to the CGT discount. A Treasurer promising an ambitious May budget. And this morning, the February CPI confirmed housing is now the dominant inflation driver in Australia.
Here is what the data is actually telling investors.
The rate picture
The RBA lifted the cash rate to 4.1% on 17 March, the second consecutive hike in a narrow 5-4 board vote. Most economists now have a third hike at the May meeting as their base case. Two hikes adds roughly $2,500 per year to a $500,000 investment loan before the tax deduction.
What the February CPI actually shows
Headline inflation came in at 3.7%, which looks like progress. But the RBA's preferred trimmed mean held at 3.3%, and the softening is largely a fuel price effect from before the Middle East conflict. The March print will likely reverse it.
The more important story is inside the data:
🏠 Housing costs: up 7.2% annually, the single biggest inflation driver
⚡ Electricity: up 37% annually
📈 Rents: re-accelerating to 3.8% annual after bottoming at just 0.4% in mid-2025
🏙️ Perth housing CPI: 14.8%, more than double the national average
Rising rents are a positive cashflow signal for landlords. Rising construction costs are making it even more difficult to bring new supply to market, placing more pressure on prices. For investors already holding property, both trends are working in your favour.
The CGT picture has crystallised
The Senate committee formally recommended reducing the 50% CGT discount last week. Treasurer Chalmers then pledged an ambitious May budget with Treasury confirmed to be drafting the changes.
Properties purchased before the legislation takes effect are expected to keep the current 50% discount for their lifetime. On a $400,000 capital gain at the top marginal rate, the difference between a 50% and 25% discount is roughly $47,000 in additional tax at sale. The pre-budget window now has a concrete deadline.
What smart investors are doing right now
Auction clearance rates fell to their lowest point of 2026 last week, with one week revised down to 57.9%. This is not a bear market. But it is a less competitive one. Buyers with capital ready are finding they can get better quality properties for less the kind of thing that often gets buried in the data until it looks like an obvious bargain in hindsight.
Full market update
The RBA lifted the cash rate to 4.1% in back-to-back hikes. February CPI shows housing inflation at 7.2% with rents re-accelerating. What it means for investors ahead of the May budget.
