Back to Research Insights >> What impact will the war in Ukraine have on the Australian property market?

We have all heard about the devastating crisis being the war on Ukraine, but what does this mean for the Australian economy and our property market?

After analyzing the history of Australian property prices and highlighting their performance during wars and global conflicts, we discovered that there is no direct relationship between the two. Property values declined during 3 periods of war, stagnated during 3 periods of war, and grew during 4 periods of war. So it is evident that war does not necessarily have a negative or positive effect on dwelling values and instead, the property market in Australia continued to move through its regular cycle, unstirred by any global conflicts.

Oil prices have recently skyrocketed – there are several reasons for this. Primarily a snapback in demand as countries return to normality after the pandemic, disruption in supply chains due to natural disasters and political turbulence, and of course the conflict between Ukraine and Russia.

As shown in the graph below, the 2008 Oil Crisis created a huge demand for oil and a stagnating supply. This saw oil prices reach an all-time high of $140 USD per barrel, almost a third higher than the current $109 USD per barrel.


When we compare the two graphs, we are given an insight into the resilience of the Australian property market. In 2008, through the Iraq war, an oil crisis, and the GFC, Australian properties retained their value, setting themselves up for a period of growth in 2010. While there was a period of stagnation during 2008, these external factors did not appear to affect the regular market cycle.

In short, Australian property performance hasn’t shown any signs of fragility during global conflict and crises.

Although the RBA has indicated it is very unlikely that they will raise interest rates anytime soon, rising inflation, driven in part by rising petrol prices, makes an upward bias on interest rates seem unavoidable.

More often than not, the start of the property price cycle is marked by the bottoming of the interest rate cycle, as the market picks up pace, fear of missing out propels the bulk of property growth – usually accompanied by rising interest rates as the RBA attempts to reduce rampant speculation.

The ongoing war and increasing price of oil will invariably continue to put a strain on the global economy, and Australia is no exception to this. But looking back through history gives us some clarity on the performance of our local property market, and its ability to remain robust in times of uncertainty and conflict.

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