The rise of boomerang kids + Trump, the money-making machine

Hi everyone,

We have a big couple of weeks ahead when it comes to your money. This week brings the latest inflation figures and property values, followed by next week’s Reserve Bank Board meeting, where a decision will be made on interest rates.

There’s a lot to unpack.

But before we get into it, I was fascinated to read that a new battery developed by China’s CATL group can take an electric vehicle from zero to full charge in just six minutes. It’s a leap that shrinks what was once an hours-long inconvenience into something no different from filling a petrol tank. The pace of change in EV development is staggering.

This week’s newsletter:

• Inflation is up, but not as much as expected.

• Why the Reserve Bank shouldn’t put rates up next week.

• Sydney and Melbourne property prices fall.

• The property supply shortage is starting to ease.

• Adult kids can save $27,000 a year... by moving back in with the folks.

• The Trump money-making presidential machine.

• Chart of the week: Your chances of being born in Australia.

Inflation picks up pace … but not as much as expected

Economists were bracing for a horror quarterly inflation figure this week given the oil shocks from the Middle East conflict and the closure of the Strait of Hormuz.

Headline inflation came in at 4.6 per cent for the March quarter - the highest since late 2023 - but this was also below the 5 per cent plus expectations of many economists.

The surprise result was the Reserve Bank of Australia's preferred trimmed mean, which rose 0.8 per cent, which is below the RBA’s forecast of 0.9 per cent. The annual rate of 3.5 per cent remains well above the 2–3 per cent target band, even before the full impact of the Iran war flows through to the official inflation data.

With the Strait of Hormuz still closed, it was no surprise to see a record 32.8 per cent monthly jump in automotive fuel prices, alongside other impacts from the Iran war that are lifting inflation expectations.

There were some encouraging signs in the data. Rents rose just 0.2 per cent in March, well below recent trends, while services inflation eased from 3.9 per cent to 3.6 per cent annually.

However, new dwelling construction costs picked up, rising from 0.15 per cent in February to 0.5 per cent in March alone. With oil-based plastics, energy and transport costs all feeding into building materials, this category remains a significant inflation risk.

Home building and vehicle repair costs also increased, along with insurance premiums -yet again.

Why the Reserve Bank should pause interest rates

Most economists reckon the RBA will lift official interest rates for a third consecutive time next week as it continues its fight against inflation.

I think the RBA should take a breath and keep rates on hold in this period of huge uncertainty.

Here’s why:

• There is a real risk a third consecutive rate rise could put excessive pressure on Australian households and businesses, potentially tipping the economy into recession.

• The surge in petrol prices has already drained household budgets by an amount similar to a 0.25 percentage point rate increase.

• The March quarter trimmed mean inflation came in below the RBA’s forecast, which was made in February before the Iran conflict began.

• Consumer and business confidence have plunged to near record lows - two critical drivers of economic activity.

• While unemployment remains low, history shows it is often the last indicator to weaken in a downturn. But when it does, it deteriorates quickly and is hard to turn around. With business confidence already shattered, there is a very real prospect of big layoffs.

• The week after the RBA Board meeting, the federal government will hand down the Budget ... wouldn’t it be better to wait and see whether it will be inflationary or not?

Sydney and Melbourne property prices continue to fall

Cotality’s national home value index rose just 0.3 per cent in April - the slowest pace of growth since January 2025.

The national result was dragged lower by Sydney and Melbourne, where values fell 0.6 per cent over the month.

Sydney home values are now 1 per cent below their November peak, while Melbourne values are 1.9 per cent below their November cyclical high and 2.3 per cent below the March 2022 peak.

Every capital city recorded a slower pace of growth in April, but conditions remain highly diverse.

Perth’s growth is clearly losing steam, but the market remains strong; values rose 2.1 per cent in April, while Brisbane, Adelaide and Darwin also saw growth slow, but from a high base, with values still rising by more than 1 per cent month-on-month in each city.

Higher interest rates, plunging consumer confidence, rising inflation and steeper mortgage repayments are all combining to have a major impact.

Softer housing conditions have been accompanied by a slowdown in buyer demand.

Estimates of capital city home sales over the past three months were 5.4 per cent lower than a year ago and 7.4 per cent below the previous five-year average. Advertised listings of properties have also lifted in the weakest markets, sitting 9.4 per cent above the five-year average in Sydney and 2.2 per cent above average in Melbourne.

While inventory remains tight across the mid-sized capitals, advertised listings are also rising in these markets ... albeit from a low base and still well below typical levels for this time of year.

This imbalance between demand and supply is also showing up in auction clearance rates, which have held below 55 per cent since the last week of March.

Growth is increasingly concentrated in lower-priced segments. Every capital city is recording stronger growth in the lower value quartile, as demand concentrates where credit availability and first home buyer incentives have the greatest influence.

In Sydney, lower-tier house values are up 2.9 per cent year-to-date compared with a 3.3 per cent fall across the most expensive quarter of the market.

Regional markets have been more resilient amid the broader slowdown, supported by relatively lower values and above-average internal migration.

Home shortage easing as building lifts across the property market

While property values are softening, the pipeline of new homes being built to meet demand is increasing, according to the Housing Industry Association (HIA).

Their Housing Scorecard benchmarks construction activity across each state and territory against long-term averages, using indicators such as home building and renovation activity, lending data and population flows.

Western Australia’s home building recovery has produced the strongest detached housing sector in the nation, the equal-strongest renovations sector, and the equal second-strongest multi-unit market.

Queensland and South Australia also appeared in the top three spots, comfortably ahead of the other states. New South Wales, Victoria and the Northern Territory sat in the middle of the pack and are still seeing relatively weak volumes of new home building entering the pipeline.

Hey adult kids, save $27,000 a year ... by moving back in with the folks

Boomerang adult children could save upwards of $27,000 a year by returning to the coop after moving out of home, with new Compare the Market research finding that older Australians and multi-generational living arrangements continue to be a major defence against rising costs.

Rental prices have accelerated at three times the rate of wages in the past five years, with prices up 43.9 per cent nationally to September 2025, according to February Cotality research. Nationally, the median weekly rental price is now $681.

But many parents are welcoming adult kids back home and offering a lifeline through cheaper board.

Saving a deposit

Compare the Market asked Australians what a reasonable weekly board amount could look like in 2026, which averaged $143.59 nationally ($7,466.68 annually). Compared with the national median weekly rent of $681 ($35,412 annually), the difference is $537.41 a week, or $27,945.32 a year.

It’s the kind of financial assistance that could help many get onto the property ladder.

When you’re looking at an annual saving of close to $28,000, that’s a massive leg up to bolster savings, gather a house deposit or line your ducks up in a row for your next big purchase.

Getting to that regular 20 per cent deposit amount is still going to be a bit of a stretch, even if living at home and paying board, but the Australian Government’s 5% Deposit Scheme could help people get there quicker.

The median national home value is now $901,257, meaning you’d require a 5% deposit of $45,062.85. Assuming you were able to save around $538 a week, you’d have enough for a deposit within about 84 weeks, which is just over a year and a half of living back home.

No matter where in the nation you are, you’d be looking at less than two years to save a 5% deposit for a median house price.

Beats paying rent

Around a third of Australians surveyed by Compare the Market (34 per cent) say they’ve been forced to move back in with their parents at least once to save money on rent, with 14 per cent admitting they’ve made multiple returns home.

Between interest rates rising, health insurance price increases and high costs continuing to hit us from every angle, many everyday Aussies are struggling to stay afloat. Having a roof over your head is a necessity, but when those costs continue to blow out at astronomical rates on top of all the other price hikes we’re facing, it’s no wonder we’re seeing so many people returning home.

Particularly for young Australians, who are juggling studying, raising families or trying to squirrel enough money away for their own house deposit, it’s getting tough out there. But the trend we’re seeing is that many parents are happy to lend a helping hand and welcome their adult kids home, even if it means charging them board at a fraction of the typical rental costs.

Making it work

While younger generations benefit, the Bank of Mum and Dad also receive their own form of financial support to cover groceries, utilities and other household costs. So, it can be a win-win in some situations.

The CTM team reported they found lots of cases of people moving back home with their own children, with multi-generational support offering financial stability amid these uncertain times.

But ongoing communication was key in ensuring these types of living and financial situations benefit all involved.

My advice: Treat living back at home like a mini flat share, with a contract, budget and a finish line.

While there can be great benefits, it doesn’t take long for these financial leg-up scenarios to turn into living nightmares, so keep the communication clear at all times.

It’s also a good idea for all parties involved to sign an agreement or contract regarding the price and frequency of board, who will cover food and utilities, chores, parking situations and more.

Set out your expectations early on so there are no nasty surprises down the road. If you treat board like a handshake deal, you’ll end up with crossed wires. Treat it like a mini-lease with a savings plan, and everyone wins.

Another thing that can help is a regular review cycle, to discuss what’s working, what’s not and ensure everyone is happy. Little adjustments early on may prevent big blow-ups later.

The Trump money-making presidential machine

I am just constantly staggered by how Donald Trump is turning his presidency into a personal money-making machine. From property deals and crypto, to insider stock trading and countries giving him outrageous gifts like luxury corporate jets.

It is just shameless ... and there seems to be no government oversight or pushback.

To put it into perspective on a global scale, look at the below list of somewhat questionable leaders and the wealth they accumulated while in power.

Trump is up there.

Chart of the week: How lucky you are to be born in Australia

I know we all whinge about a lot of things, but how lucky are we to live in Australia? We have a great lifestyle, high standard of living, stable government, low crime rates etc.

Just to show how lucky you are if you were born here, this is a chart showing the chances of being born in different continents:

We really are the ‘lucky country’.

Have a great week, everyone.