With the latestΒ inflation dataΒ coming in higher than expected, many homeowners have been left wondering whether the Reserve Bank of Australia (RBA) will hike the cash rate next month.
Even if the RBA doesnβt increase the cash rate, experts predict housing purchases will slow due to weakening economic conditions and affordability constraints.
With job vacancies dropping, employment growth slowing, and the unemployment rate lifting, mortgage serviceability may weaken, particularly if homeowners lose their jobs or work fewer hours.
Data from theΒ Australian Bureau of Statistics shows that the household savings to income ratio fell from 1.6% to 0.9% in the March quarter. In other words, saving a deposit is becoming more difficult for many Australians.
If youβre looking to enter the market, chat with us about your finance options. Weβll explainΒ what solutions are available to you.
Interest rate news
The monthly Consumer Price Index indicatorΒ jumped to 4 percent in the 12 months to May, up from 3.6 percent in April. The largest increases in prices were in housing, up 5.2%; food and non-alcoholic beverages, upΒ 3.3%; transport, up 4.9%; and alcohol and tobacco, up 6.7%.
Thereβs now growing concern that with inflation on the rise, the RBA may increase the cash rate again when the board next meets onΒ AugustΒ 5-6.
TheΒ minutesΒ from the RBAβs last meeting revealed the board was ready to raise rates if βinflation expectationsβ changed.
The discussion, held on June 17 and 18, showed that the board, led by RBA Governor Michele Bullock, was concerned about rising prices and the challenge of bringing inflation back to the target of 2-3 percent.
Talk of a cash rate cut has largely been put on ice, with some of theΒ Big Four anticipating it will not happen until February or May 2025.Β OthersΒ are more optimistic it could still happen this year.
Meanwhile,Β mortgage arrearsΒ have been rising from their COVID lows of just 1.0% in the third quarter of 2022, reaching 1.6% in the March quarter of 2024.
Research released byΒ ASICβs MoneysmartΒ found 47% of Australian adults with debt, or 5.8 million people, struggled to make repayments in the last 12 months. The top reasons included cost-of-living pressures, reduced income and unexpected expenses. Yet many people donβt ask for help.
If you fall into this category, please reach out. Weβll compare the market and see how your mortgage measures up against others.
Home value movements
AustraliaβsΒ property valuesΒ increased a further 0.7% in June, reaching a total growth of 8% across the financial year.
Perth continued to perform strongly in June, with home values increasing by 2%. Adelaide also saw strong growth, at 1.7%, while Brisbaneβs property prices increased by 1.2%.
Prices were flatter in Canberra (0.3%), Hobart (0.2%), and Darwin (0%). Melbourne saw prices decrease by -0.2%.
CoreLogicβs research directorΒ Tim LawlessΒ said the national index had found a groove, rising between 0.5% to 0.8% month on month since February.
βThe persistent growth comes despite an array of downside risks, including high rates, cost of living pressures, affordability challenges and tight credit policy,β he said.
βThe housing market resilience comes back to tight supply levels which are keeping upward pressure on values.β
All dwellings | Auctions | Clearance Rate | Private Sale | Monthly home values change |
---|---|---|---|---|
VIC | 971 | 57% | 1332 | βΌΒ β 0.2% |
NSW | 1076 | 54% | 1731 | β²Β 0.5% |
ACT | 81 | 52% | 116 | β²Β 0.3% |
QLD | 289 | 48% | 1162 | β²Β 1.2% |
WA | 6 | 50% | 713 | β²Β 2.0% |
NT | 2 | 50% | 16 | 0% |
TAS | 2 | -% | 139 | β²Β 0.3% |
SA | 139 | 76% | 365 | β²Β 1.7% |
* Australian auction results, clearance rates and recent sales for the week ending 30 June 2024
* The clearance rate is preliminary and current as of 4:30Β pm, 3 July 2024
If youβre looking to say goodbye to the winter blues with a property purchase, contact us to find a home loan that fits your specific needs.
Simply get in touch, and weβll run through which lenders you may qualify with.