(Bloomberg) -- Australia’s property stocks are trailing global peers by the most in 16 years, and analysts worry it may get worse as the prospect of more rate hikes and the unraveling of a suburban developer intensify scrutiny in the sector.
A gauge of Australia’s listed real estate shares has tumbled 15% this year, compared with a 7% gain for Bloomberg’s index of developed markets’ real estate stocks. That puts the sector on track for its worst year relative to global peers since 2010.
A hawkish Reserve Bank and weaker home sales are squeezing margins, slowing development and putting earnings at risk. Likely prospects of further rate hikes, property tax changes and a prolonged housing downturn add to the pressure, with the recent collapse of private developer Bathla Group underscoring the strain.
“It wasn’t a glorious 2026, and we don’t expect FY27 to be glorious,” said Yingqi Tan, an analyst at Morningstar Inc. Higher rates remain a major drag on commercial and residential property managers, with the firm forecasting a 5% decline in earnings in FY27, she said.
Australia’s central bank has delivered three straight rate hikes this year to curb inflation, with swaps fully pricing another rate increase in November and a roughly 90% chance of a further hike by mid-2027. The aggressive tightening is squeezing debt-dependent firms, with Dexus and BWP Property Group Ltd. flagging higher borrowing costs in their latest results.