Blog post by Empower Wealth

RBA Nov 2026 | The Real Scare is Closer to Home

⚠️ Rise: The RBA has raised the cash rate by 25 basis points to 4.85%, its fifth increase this year and the highest level since late 2008.

Halloween might be over, but Australia’s economic challenges are far from disappearing.

While global conflicts and rising energy prices are grabbing headlines, there’s a much bigger problem brewing closer to home.

As it turns out, Australia’s inflation problem isn’t just imported. It’s homegrown.

And with unemployment rising, consumer confidence falling, productivity stagnating and the property market under considerable pressure, the question is becoming increasingly uncomfortable: Is Australia heading for a harder economic landing than expected?

In this month’s RBA and Economic Update, Empower Wealth Founder and Managing Director Ben Kingsley and economist Evan Lucas unpack the data behind the November rate decision and the bigger challenges facing the Australian economy.

Key Takeaways

Inflation is heading in the wrong direction. Headline inflation rose to 4.3% in September, while annual trimmed mean inflation reached 3.6%. Both remain above the RBA’s 2–3% target.
The real problem is homegrown. Australia’s domestic inflation pressures remain stubborn, particularly across rent, education, healthcare and services.
The job market is softening. Unemployment has reached 4.7%, the highest since October 2021.
Productivity is the problem interest rates can’t fix. Construction productivity has deteriorated over the past 25 years, making Australia’s housing supply challenge even harder.
The property correction may have further to run. That’s a risk for some, but potentially an opportunity for others.
December matters. With another RBA meeting on 8 December, the economic data released over the coming weeks will be critical.

The Case For and Against a Rise

Ben and Evan weigh up both sides of the RBA’s difficult decision.

The case for a rise:

Underlying inflation remains too high
The inflation outlook has deteriorated
Domestic capacity pressures persist
Higher energy costs threaten to flow into broader prices
Waiting risks higher inflation expectations becoming entrenched

The case for a hold:

This year’s four previous rate rises need time to flow through the economy
The RBA has a dual mandate, and unemployment has already reached 4.7%
There are signs demand is slowing
Some recent inflation pressures are driven by volatile fuel prices, which may prove temporary
The December meeting provides an opportunity to reassess the latest inflation and employment data

Evan also highlights pockets of exceptionally strong business investment, particularly in AI and data centres. While this investment is positive for parts of the economy, it creates another challenge for the RBA, which has only one blunt tool to slow demand across the board. In Evan’s words, it’s a “sledgehammer doing fine art”.

Then there’s the question of credibility. After years of battling persistent inflation, the RBA needs to demonstrate that when it’s called on to act, it will.

Closer to Home: Australia’s Homegrown Inflation Problem

The Middle East conflict has pushed up fuel and imported goods prices around the world. But Australia is also facing persistent domestic inflation that global developments alone cannot explain. The clearest evidence of which is in non-tradables: goods and services that cannot readily be imported, such as rent, education and healthcare. Even cafés and restaurants are experiencing inflation of around 5%, despite ongoing cost-of-living pressures.

Rents aren’t coming down anytime soon

Housing accounts for roughly a quarter of Australia’s CPI basket, making it a significant contributor to inflation. Cotality’s Tim Lawless has noted that official rent data lags private data by three to six months, and private data shows rents rising. With housing supply constrained, construction costs elevated and changes to investment property tax settings adding another consideration, Ben sees little reason to expect rents to fall significantly in the near term.

The rising cost of “life admin”

Evan introduces another interesting measure: the cost of everyday financial obligations, or what he calls life admin. This includes rent, council rates, maintenance, utilities, fuel, public transport, insurance and childcare. According to the data Evan presents, these costs are currently rising at approximately 5.45% annually, down from above 6% when he and Ben last examined them. But it’s the cumulative impact that matters. Since COVID, some of these expenses have increased by as much as 37%. And for households already feeling the pinch, those increases are difficult to escape.

Productivity: The Problem Interest Rates Can’t Fix

Ben and Evan promised a deeper look at Australia’s productivity challenges in this month’s update. The short version: it can’t be explained by a single number.

Market-sector productivity has slowed, with Ben and Evan highlighting a decline in its longer-term growth rate from approximately 1.9% to 0.7% annually.
Non-market sectors, including healthcare, education and public administration, have experienced declining productivity. However, Evan explains that measuring output in labour-intensive care services can be particularly difficult.
Agriculture is the standout performer, mining is about as productive as it can get, and manufacturing and household services are going backwards. Challenges include rising costs, regulation and workforce constraints.
Construction is one of the biggest concerns, with productivity deteriorating over the past 25 years. An apartment block that took 17 months to deliver can now take 31. A house-and-land package has gone from seven or eight months to as much as 17.

Ben pointed to a building code that runs to thousands of pages and differs between states, growing red and green tape, restrictive workplace conditions and a failure to bring in enough skilled tradespeople. Both Ben and Evan believe meaningful productivity reform will be critical in 2027, because raising interest rates may slow demand, but it won’t solve the underlying supply and productivity problems.

What This Means for Australia’s Property Market

Ben believes the Australian property market could experience its most significant correction in four decades, with further downward pressure on prices possible. But how that affects you depends on your circumstances:

If you’re living in your own home, falling values aren’t necessarily a problem if you’re financially comfortable and have no immediate plans to sell.
If you’re close to negative equity, selling into a weaker market could create additional challenges, so it’s important to carefully assess your options.
If you’re in a position to buy, Ben believes these could be some of the best buying conditions in years, possibly a decade.

As always, not every property or market will perform the same way. The key is understanding your financial position and making informed decisions based on your goals, rather than reacting to headlines.

What to Watch Next

There are several important economic releases ahead of the RBA’s final meeting for 2026:

4 November: September household spending data
19 November: October labour force figures
25 November: October inflation figures
8 December: The RBA’s final decision for 2026, with Ben and Evan’s end-of-year update covering the US, Europe, the Middle East and a full property market update

Is It Time to Review Your Strategy?

In uncertain economic conditions, staying proactive and understanding your financial position is more important than ever.

At Empower Wealth, we help clients navigate changing market conditions while staying focused on their long-term wealth and lifestyle goals. Now could be a good time to:

✔ Review your current loan to understand whether your interest rate and loan structure remain competitive
✔ Reassess your borrowing power and understand how changing interest rates and lending conditions may affect your options
✔ Explore your next property move and whether current market conditions could present an opportunity for you

With our award-winning Mortgage Broking team and integrated property and financial advisory services, you can access guidance tailored to your circumstances, all in one place. Book a free, no-obligation initial consultation with our team to explore your options and take the next step towards your financial goals.

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Tags: Australian economy, Australian property market, Cash Rate, Current Interest Rates, Gross Domestic Product (GDP), Home Loan, Inflation, Interest Rate, Interest Rate Announcement, Monetary Policy, mortgage broking, Property Market, property prices, RBA, rba cash rate, RBA Rate, Reserve Bank of Australia (RBA), Unemployment