HEY NEIGHBOUR!

There certainly hasn’t been a shortage of news since our last newsletter, and this month we’re looking at three stories that, although very different, could all have a very real impact on Victorian households, property owners and investors.

We start here at home with the extraordinary political demise of Jacinta Allan, who was forced to step down as Victorian Premier after losing the support of her own Labor colleagues. With Ben Carroll now in the top job and a State Election only months away, Victorians will be watching closely to see whether this represents simply a change of leader or a genuine change in direction. With state debt, taxation, housing, infrastructure spending and the cost of doing business all firmly in the spotlight, there is certainly plenty for the new Premier to address. Get prepared for more lies!

Property investors are also trying to navigate another round of change. Federal Labor's changes affecting property investment and SMSFs have created considerable uncertainty. In our office alone we have seen a rush by investors looking to get residential property into their SMSF structures before the rules change. As we discuss this month, the bigger question is what happens when government policy continues to discourage private investment in residential property. With rental supply already tight, fewer investors owning rental properties could ultimately mean even greater competition for renters and further upward pressure on rents.

Then there is the situation between Donald Trump, the United States and Iran. It may seem a long way from Melbourne, but when instability in the Middle East pushes up global oil and energy prices, Australians inevitably feel it. Higher petrol, freight and transport costs eventually filter through to groceries, business expenses and the broader cost of living — exactly what Australian households don't need after several difficult years.

Against that backdrop, there was at least some welcome news from the Reserve Bank this week, with the Board leaving the cash rate on hold at 4.35%. The RBA has made it clear, however, that inflation remains too high and is not expected to return to the middle of its 2–3% target range until early next year. For mortgage holders, investors and businesses, a pause is certainly preferable to another increase, but we're probably not out of the woods yet.

And finally, as always, we finish with Carlton — and what a turnaround it has been. After taking over with the Blues sitting at 1–8, interim coach Josh Fraser has overseen a remarkable transformation, including 10 wins from his first 12 games in charge. The Carlton faithful made their feelings very clear against St Kilda with chants of “We want Fraser”, and now Fraser has officially put his hand up to become Carlton's permanent senior coach for next season.

After initially saying he wasn't ready to pursue the full-time position, Fraser's change of heart is understandable given what he has achieved with the group. There is a very different feeling around Carlton today than there was only a few months ago. From where I'm sitting, happy to join the chant “ We want Fraser” !!

Warm regards,

Carmela

MARKET INSIGHTS

We strive to stay up to date on the latest market trends. Here are a few articles we think are worth reading.

Jacinta Allan Gone — Labor Turns on Its Own Premier (abc.net.au)

Victorian politics has been turned on its head just months out from the November state election, with Jacinta Allan resigning as Premier after losing the support of her own parliamentary party.

The extraordinary events unfolded after a cross-factional delegation of Labor ministers and MPs told Allan she no longer had the numbers in caucus. Deputy Premier Ben Carroll subsequently announced he would challenge for the leadership. Allan initially indicated she would fight on, but resigned shortly before the caucus meeting at which she was widely expected to lose a spill motion. Carroll was then elected leader unopposed and became Victoria's new Premier.

The leadership change comes after growing pressure on the government over Victoria's debt position, concerns surrounding the CFMEU and major infrastructure projects, and deteriorating polling. Allan had also faced internal criticism over her government's handling of allegations involving the construction sector. She has denied wrongdoing and maintained that allegations of criminal conduct should be properly investigated.

For Victorians, however, changing the person at the top doesn't make the underlying issues disappear. Housing affordability, property taxes, government debt, infrastructure spending and the cost of doing business remain significant issues heading into November.

Key Takeaways:

• Jacinta Allan resigned after being told she had lost the support of the Labor caucus, avoiding a leadership spill she was expected to lose.
• Former Deputy Premier Ben Carroll has taken over as Premier only months before Victoria votes.
• The leadership change places renewed focus on Labor's record on debt, infrastructure, housing, taxation and integrity ahead of the November election.

The SMSF Property Rush — Investors Race the Clock (moneysmart.gov.au)

The Federal Government's changes to property taxation and superannuation have created another significant shift in Australia's property investment landscape — and SMSFs have been right in the middle of it.

There are actually two forces operating at once. The government's broader property tax changes have made traditional residential property investment less attractive to some investors, while SMSFs initially offered an alternative structure. But Labor's subsequent agreement with the Greens to prohibit new Limited Recourse Borrowing Arrangements (LRBAs) for residential property has put a deadline on borrowing to buy residential property through an SMSF. The window has now closed. Existing arrangements are grandfathered, with transitional provisions for arrangements already underway.

That has helped create a rush among some investors to get SMSF residential purchases underway before the window closes. At the same time, the broader investment-property market is showing signs of stress. Today's reporting points to investors retreating from residential property despite rising rents and yields, while major lenders are reporting sharply weaker mortgage demand following the government's property tax changes.

This is where we believe the longer-term consequences could become particularly interesting. If governments continue making residential property less attractive to private investors, the number of rental properties available does not magically increase. With Australia's population still requiring more housing, a reduction in private rental investment risks putting further upward pressure on rents.

For context, SMSFs are already a substantial part of Australia's investment landscape. There were more than 653,000 SMSFs holding over $1 trillion in assets at the end of 2025, with approximately 17.5% of SMSF assets invested in residential and commercial property.

Key Takeaways:

• New SMSF borrowing to purchase residential property has been shut down; the past months have created urgency for investors already considering an SMSF purchase.
• Broader Federal Government tax changes are also reducing the attractiveness of traditional residential property investment, with evidence of declining investor mortgage demand.
• Fewer private investors could ultimately mean fewer rental properties and greater pressure on rents, particularly while housing supply remains constrained.

Claremont Financial x The Neighbourhood (claremontfinancial.com.au)

The Reserve Bank of Australia (RBA) did not meet in July, leaving the cash rate steady at 4.35%, with the next decision due on 11 August. Fresh inflation figures released on 29 July showed headline inflation easing to 3.8%, taking some pressure off borrowers, though underlying inflation is proving a little stickier. Melbourne's property values have softened over recent months, but the rental market remains firmly in landlords' favour, with vacancies near record lows and rents still climbing. For well-qualified buyers and investors, competitive lending and solid rental demand continue to create opportunities.

Key Takeaways:

• Inflation is trending down: Headline inflation slowed to 3.8% in June, helped by falling fuel prices, which takes some heat out of the cost-of-living picture. Underlying inflation is proving stickier, so the RBA is likely to stay cautious when it meets in August.
• Melbourne softens, rentals stay tight: Dwelling values eased around 1% in June and buyers are finding a little more room to negotiate. For landlords, the story is stronger, with vacancy rates near 1.5% and rents up close to 6% over the year.
• Yields improving for investors: Rising rents against softer values are lifting rental yields for the first time this cycle. With lenders still competitive for quality borrowers, investors have reason to review their position.

If you wish to discuss this further, feel free to reach out.

Back to War — Why Trump and Iran Matter to Your Household Budget (abc.net.au)

Australians may be thousands of kilometres from the renewed confrontation between the United States and Iran, but the economic consequences have a habit of arriving very quickly at our petrol stations, supermarkets and mortgage repayments.

Renewed US-Iran tensions have again shaken global oil markets. In July, oil surged by more than 10% following heightened tensions and disruption around the strategically critical Strait of Hormuz, through which a significant share of the world's energy supplies normally passes.

The immediate impact for Australians is petrol and diesel. In late July, oil again moved above US$100 a barrel, while Australia's national average price for unleaded 91 reached around $1.88 per litre and diesel around $2.30. The Federal Government maintained that Australia's physical fuel supplies remained secure, but secure supply does not necessarily mean cheap supply.

The bigger concern is inflation. Higher fuel costs flow through almost everything we buy. Trucks transport groceries and consumer goods, airlines consume enormous quantities of fuel, businesses pay higher freight bills and energy costs can also rise. Those costs ultimately find their way into household budgets.

And then comes the RBA. Economists have warned that a prolonged US-Iran conflict and sustained increase in energy prices could increase the likelihood of further Australian interest-rate rises. That means a conflict on the other side of the world can ultimately affect not only what we pay at the petrol pump, but potentially what Australian homeowners pay on their mortgages. It beggars belief that the RBA, the Government and other decision-makers have no other levers they can use apart from raising interest rates until clients with approved loans begin to default.

The rapid movements in oil prices demonstrate just how sensitive the outlook remains.

Key Takeaways:

• Renewed US-Iran tensions have already demonstrated their ability to send global oil and Australian fuel prices sharply higher.
• Higher fuel and freight costs can feed into food, electricity, transport and general inflation, adding further pressure to household budgets.
• If the conflict keeps inflation elevated, the biggest sting could come from the RBA keeping rates higher — or raising them further.