RBA Keeps Rates Steady & Housing Affordability Concerns Rise
Weekly Real Estate Market Update with Leigh Martinuzzi MPG
In last week’s RBA meeting, the decision to keep the cash rate unchanged at 4.35% came as no surprise. The Board highlighted that while inflationary pressures are easing, underlying inflation remains a concern. They’d like to bring inflation back to the 2-3% target range, currently sitting at 3.8% GDP growth was as expected, but weak household consumption raised some red flags. The labour market remains tight, but the broader economy is showing mixed signals. The RBA is carefully balancing these risks while keeping a close eye on inflation and demand before making future rate adjustments.
The last time the rate was higher than this was back in 2011. The next meetings to wrap up 2024 will be in November and December. Banks predict rate cuts as early as November 20224 and as late as June 2025 with many banks already passing on lower variable rates to their customers. If you missed my chat with Colin Mason from Mason Financing?
Check it out here: Podcast with Colin Mason
Meanwhile, a recent survey by Matusik explored the growing importance of “affordable decent housing” in Australia. Over half of Australians now rank housing affordability as a top factor for liveability, especially among younger people and renters. However, satisfaction with access remains low, particularly in regions like Queensland. Matusik suggests that many people are being pushed into relocating, leading to dissatisfaction. Further suggestions have been made the two-thirds of Australians are happy satisfied with their housing location. I’d probably suggest they are the ones in ideal locations around Australia and who have grown their personal wealth through property price increases.
This week, an article discussing the Australian Bureau of Statistics’ report on inflation, highlighted that Australian household wealth has risen for the seventh consecutive quarter, largely driven by house price increases. Meanwhile, rental markets are showing mixed results, with house rents easing in most capital cities while unit rents are more stable.
On the unit market front, an analysis by CoreLogic revealed that many unit markets in Sydney and Melbourne still have values below their 2010s peaks, with many vendors selling at a loss. Despite improved affordability in some areas, buyers remain hesitant, particularly due to concerns over the supply of investment-grade units built during that time. Some markets have seen price gains, but others remain stagnant, proving that not all supply is equal.
As always, if you’d like to understand how these market trends impact your next property move, feel free to reach out for a chat!
