Property investors put your seatbelts on + What's AI doing to super?

Hi everyone,

I’ve spent the whole week in Adelaide focused on football and tourism. I kicked off Monday night at Port Adelaide’s Hall of Fame and season launch event. Then it was on to LIV Golf Adelaide - a major global golf event that has become one of South Australia’s signature sporting attractions.

The city is certainly buzzing.

Speaking of buzzing, global sharemarkets are re-rating tech stocks based on fears of what AI will do to a number of companies. It is certainly creating a rollercoaster ride for investors who seem to be fleeing to the safety of banks and blue chip industrials … how good was the CommBank financial result and the subsequent surge in share price?

In this week’s newsletter:

• The Federal Government’s crazy tax focus.

• The facts behind the rental crisis.

• 10 ways to combat Australia’s rising rents.

• Superannuation funds weather the market turmoil.

• A top car insurance hack to cut your premiums.

• The size of our economy compared with the rest of the world.

The Federal Government’s crazy tax focus

Governments across all levels are spending at record levels. That record spending was justified during Covid because it stopped the economy from plunging into a depression.

The problem is that this level of spending has continued even as the economy has returned to normal. As a result, inflation has surged again and interest rates have been raised, adding further pressure during an already painful cost-of-living crisis.

While average Australians were asked to tighten their belts to help fight inflation, those efforts and sacrifices were undermined by governments loosening theirs. Now Australians are being penalised, paying more on their mortgages and loans as a consequence.

What worries me is that instead of cutting spending, governments are looking at ways to increase tax revenue to fund that higher spending. And some of the suggestions are just crazy and don’t take into account the ripple effect.

One of the drivers of inflation is building costs and rents. We’re in the middle of a housing supply crisis where not enough houses are being built which is pushing up values and rents.

So, what does the Federal Government do to solve this problem? They propose to reduce capital gains tax concessions to make it less appealing to be a property investor.

Remember these property investors have every right to sell their properties and invest elsewhere, leaving even fewer properties available for rent.

The Housing Industry Association (HIA) has urged the Federal Government to use the 2026–27 Budget to reset housing policy, warning that Australia’s housing shortage has become a structural economic challenge.

The HIA outlines a suite of supply-side reforms spanning taxation, finance, infrastructure, planning, skills and regulation to help deliver the Government’s target of 1.2 million homes by 2029. Importantly, it highlights that persistent housing undersupply is contributing to inflation pressures, worsening rental conditions and constraining economic growth.

Housing is already one of the most heavily taxed sectors in the economy. Further tax changes, including negative gearing or capital gains tax, would undermine investment, reduce feasibility and worsen affordability.

The facts behind the rental crisis

The Federal Government needs to be enticing new property investors and not dissuading them through tax changes and reducing the rights of landlords.

Latest data from property research group Cotality shows annual rent growth accelerating to 5.4 per cent to January 2026, despite already stretched household budgets and a brief easing earlier in 2025.

Affordability has hit a new low, with renters now spending an average 33.4 per cent of pre-tax income on rent, driven by tight vacancy rates, limited new supply and demand continuing to outpace housing availability.

Australian rents have surged almost three times faster than wages over the past five years, pushing rental affordability to record lows and stretching household budgets across the country.

Cotality’s analysis shows national rents have jumped 43.9 per cent over the five years to September 2025, compared with a 17.5 per cent rise in wages over the same period.

Western Australia is the epicentre of the rental crunch, with rents soaring 66 per cent in five years - far outstripping even above-average wage growth - while the ACT is the only market where rents and wages have remained broadly aligned.

Cotality’s Tim Lawless said rental conditions were unlikely to normalise quickly without a sustained lift in supply.

“With vacancy rates still around record lows in many markets and new housing completions running below what is needed to meet population growth, it is hard to see rents materially easing in the near term,” he said.

10 ways to combat Australia’s rising rents

Rents are soaring across Australia, with increases now well above inflation.

For many tenants, the cost-of-living crisis is crippling, especially as everyday essentials like groceries, electricity and petrol continue to climb.

But here’s the good news: if you are paying ever-increasing rent, you don’t have to just cop it. There are practical steps you can take to reduce your housing costs and even build financial momentum for the future.

A perfect storm

As I mentioned above, rents are soaring across Australia, with increases now well above inflation. Rental supply is extremely low and demand is extremely high - so it’s a perfect storm that keeps rents going up and up.

While it’s unlikely to ease soon, there are steps you can take to reduce the financial sting of paying rent.

10 smart money moves for tenants

1. Negotiate with your landlord
Many landlords prefer keeping a reliable tenant rather than risk vacancy and advertising costs. If you’ve been paying rent on time, looking after the property, and communicating well, ask if a moderate increase is possible.

Offering a longer lease can sweeten the deal.

2. Shop around before renewing
Before signing a lease renewal, compare what else is available - even in neighbouring suburbs. Moving a few kilometres can sometimes save hundreds per month. It’s a hassle, but long-term savings, especially if you can secure a longer lease, may make it worthwhile.

3. Lock in a longer lease
If you find a place you like at a decent price, ask whether the landlord will offer a 12- to 24-month lease at the current rate.

This protects you against sudden rent hikes.

4. Downsize or share
Reducing space or sharing costs can significantly lower rent and bills.

These days house-sharing isn’t just for 20-somethings. I have heard of some single mums forming “mumunes”... renting larger homes together and splitting the rent, food, bills etc, and helping each other with childcare and school drop-offs.

5. Look beyond the city
Regional towns and outer-ring suburbs can still offer better value than inner-city hotspots, even though demand is rising. Expanding your search might uncover affordable options that fit your lifestyle and commute.

6. Up your income
Sometimes the best way to fight rising costs is to boost your earnings. This could be a pay rise, a higher-paying job, investing (carefully), or finding a creative side income (like selling unused items, side hustles, or renting out your car).

7. Take advantage of government assistance
If you’re eligible, consider:

• Rental assistance through Centrelink for those on low incomes or experiencing hardship

• Local or state housing support services offering bond assistance and more (see all at myGov).

8. Shave costs elsewhere
I’m not going to say stop ordering smashed avocado on toast. Australia’s housing affordability problem is about supply, not what we eat for breakfast! But trimming unnecessary expenses always helps.

Consider:

• Comparing electricity, internet, and insurance plans and getting a better deal.

• Canceling unused subscriptions (usually through your settings, not just deleting the app).

• Paying down high-interest debt like credit cards.

• Reviewing your spending using statements or budgeting apps and seeing how making even small savings could add up.

9. Time your lease
Rental markets are seasonal. Winter can see lower demand than summer, which can lead to softer rent increases.

Timing your lease strategically can help.

10. Plan for financial freedom
Paying off your own mortgage is always going to be financially preferable in the long term to paying rent. But even if buying property isn't realistic any time soon, planning for it is smart.

Look into first-home buyer schemes (5 per cent deposit guarantee and state-based duty exemptions), but also ways to boost borrowing power, and start a property deposit savings plan.

It’s also worth thinking of other ways to build wealth, like investing in managed funds, rentvesting (where you buy somewhere more affordable and rent where you actually want to live), or making voluntary super contributions that come with tax benefits. There are plenty of ways to grow wealth beyond the traditional owner-occupier property path.

Claim back some power

Rising rents are tough and I really feel for tenants. Housing is now taking up more of Australians’ income than ever before.

But by being strategic and having a plan, I hope you can protect your money, reduce your stress levels around it and have a stronger financial plan for the future.

Good luck.

Superannuation funds weather market turmoil

Superannuation balances continued to grow over the first month of 2026 with leading superannuation research house, SuperRatings, estimating the median balanced option generated a modest return of 0.5 per cent in January.

The January bump is the sixth positive return for members this financial year, with November 2025 the only month funds haven’t added to member balances through investment returns. However, returns are significantly more muted than this time last year with the financial year to date return sitting at 4.8 per cent compared to 8 per cent at the same time in 2025.

The rest of the financial year could see funds struggle to match the 10.5 per cent return achieved in 2025. High expectations around AI are starting to put pressure on share prices - particularly for companies seen as vulnerable to disruption or those not delivering on growth targets. At the same time, ongoing geopolitical tensions and rising inflation in Australia are adding to the challenges.

The median growth option also increased by an estimated 0.5 per cent in January, while the median capital stable option delivered a 0.4 per cent return to members.

Pension returns were concentrated over the month with the median balanced, growth and capital stable pension options all delivering 0.5 per cent for the month. Financial year to date returns remain above accumulation accounts, mostly due to tax benefits, with the median balanced pension option returning and estimated 5.5 per cent over the first seven months of the year.

A top hack to cut your car insurance

A simple tweak could cut hundreds of dollars from your car insurance premium, with Compare the Market urging Australian motorists not to stick with the default excess when taking out or renewing a policy.

The comparison experts found an average quoted annual difference of $398 (17 per cent) by increasing the excess on a sample car insurance policy from $600 to $1,000.

While not all insurers offer every excess option, premiums were quoted at around $1,300 less on average per year when the excess was lifted from $500 to $2,000.

This one change could save you hundreds, but the right choice will ultimately depend on how much you can afford to pay out of pocket if you need to make a claim.

A car insurance excess is the set amount you agree to pay when you lodge a claim after events such as theft, storm damage or an accident- unless your insurer determines you were not at fault.

That’s the basic excess, but additional excesses may apply depending on your policy - for example, if the driver is under 25 or isn’t listed on the policy.

While a higher basic excess usually means a lower premium, some repair costs could end up being less than the excess you choose, so it’s often a balancing act.

The good news is that most insurers let you adjust your excess at any time - you don’t have to wait until renewal. Just make sure it’s the right decision for your situation.

You could also consider paying annually instead of monthly and taking advantage of any available discounts or incentives.

Size of Australian economy on a global scale

Ever wondered where Australia ranks in terms of size of the economy on a global scale?

Here’s your answer:

Have a great week, everyone.