Quarterly economic update: February - April 2025

These last few months have reminded us just how vulnerable investment markets are to the economy and political landscape. From a landslide federal election here in Australia to sharemarket volatility, rising gold prices, and the continued cost-of-living challenges, there’s been no shortage of talking points.

Election Shake-Up

On 3 May, voters made their voices heard—and loudly. Labor, led by Anthony Albanese, wasn’t just re-elected. They surged to a clear majority, securing 93 seats in the House. For context, that’s a leap from the 77 seats they held after the last election. Meanwhile, the Liberal-National Coalition endured a historic blow. Most shocking? Peter Dutton lost his seat in Dickson. Yes, the sitting Opposition Leader was ousted—a first in Australian federal politics. In the aftermath, Sussan Ley was elected as the new leader of the Liberal Party, marking a significant moment as the party’s first female leader at the federal level.

Trump’s Tariff Tantrum Rattles Markets

Across the Pacific, familiar tensions have returned. Donald Trump—never one to do things quietly—slapped tariffs on every country worldwide on 2^nd April in what he called “Liberation Day”.  This caused a tariff war where retaliatory tariffs were added to US-sourced products. China was targeted explicitly with tariffs threatened by the USA of 184% at the height of the debacle.  The result? Global markets wobbled, falling over 15% in just days, and investors looked for safety. Unsurprisingly, gold became the go-to refuge, climbing to a record AUD 3,300 an ounce by late April. That’s a clear sign the markets are uneasy.

The tactic worked—it brought global leaders to the negotiating table, re-igniting investor confidence, and global markets rocketed up by 20% since.

RBA Eases Pressure, But It’s No Silver Bullet

Back at home, the Reserve Bank cut interest rates by 0.25% in February, nudging the official cash rate to 3.85%. The move was triggered by cooling inflation, now at 2.4%, and a desire to ease pressure on borrowers. But let’s not sugar-coat it. Households are still feeling the pinch in real terms. Groceries, utilities, petrol—it all adds up, and many are doing it tough.

Housing Market: Some Bounce, But Still a Bruise

There’s a mixed bag in the property space.  Perth and Adelaide continue to grow, and Sydney property values increased 1% over the quarter.  NAB’s Residential Property Index jumped to +40.  So while confidence seems to be creeping back into property, it doesn’t mean housing is any more affordable.  Wage growth isn’t keeping up, and Equifax data suggests 1.45 million mortgage holders are under stress.   That’s nearly one in six borrowers struggling to make ends meet, so could this be the tipping point for property in months to come?