Dear Client
AUGUST CASH RATE CALL BRINGS CLARITY FOR SPRING SELLING SEASON
It’s been seven weeks since the last cash rate call, with opinions varying on whether the next move would be a hold or rise. Now, the Reserve Bank of Australia (RBA) has delivered its first decision of FY25.
The central bank has announced it will hold the cash rate, electing to keep the figure steady at 4.35 per cent for the sixth consecutive monetary policy meeting.
With the Australian Bureau of Statistics (ABS) data showing at the end of June that the Consumer Price Index (CPI) had risen 4 per cent in the 12 months to May, up from a 3.6 per cent rise in April and 3.5 per cent in March, speculation had risen that the RBA would feel forced to enact another hike.
Even so, many, such as the Real Estate Institute of Australia, noted that the monthly CPI indicator was not as comprehensive as the ABS’s quarterly inflation data, and urged calm among mortgage holders and prospective buyers worried about their ability to service increasing loans.
A cautious view proved prudent late last week when ABS data for the June quarter 2024 revealed a quarterly rise of 1 per cent and an annual rise of 3.8 per cent, allaying inflationary fears for the short term.
Cameron Kusher, PropTrack’s director of economic research, noted that “the job is certainly not done on inflation”, but said that spring selling season was expected to be strong, even as home prices were reflecting the impact of sustained high mortgage rates.
“The rate of growth in home prices has consistently slowed over the past five months and we continue to see the lowest number of annual dwelling approvals in more than a decade.”
“Despite slowing price growth, more properties are being listed for sale and sales volumes remain robust,” he said.
Even so, Kusher commented that another rise could not be written off, with inflation “still too high and rising at too fast of a pace to bring it into the target range”.
Kusher added that the latest call provided some clarity for the real estate industry, with “stable interest rates likely to support vendor and purchaser confidence as we head into the busier spring period”.
LJ Hooker Group’s head of research, Mathew Tiller, agreed that the spring selling season was looking positive, even as price growth moderated.
“Looking ahead, the RBA is likely to maintain the current cash rate for the remainder of 2024 which will give both buyers and sellers confidence,” he said.
Tiller commented that the real estate network had seen a surge in the number of property appraisals requested since the start of winter, which he attributed in part to the speculation of a further cash rate increase.
“These appraisals have likely included home owners and highly leveraged investors considering their options, including downsizing their mortgage in the face of ongoing high interest rates,” Tiller said.
August cash rate call brings clarity for spring selling season – Real Estate Business
AUSTRALIA SEES LARGEST RENT DECLINES SINCE COVID
Broad-based falls in rental prices are sweeping Australia, bringing much-needed relief to renters.
Over the past 30 days, capital city asking rents have declined by 0.5 per cent – the largest monthly decline since the pandemic, according to new data from SQM Research.
Sydney recorded a 1 per cent decrease in combined house and unit rents, while Melbourne recorded a more modest drop of 0.6 per cent.
Even the white-hot markets of Perth and Brisbane have been cooling, with rents dropping 0.6 per cent and 0.5 per cent respectively.
Only Adelaide and Darwin saw an increase in rents over the past month, with coastal regions like the Gold Coast and Mornington Peninsula also witnessing declines.
While the news will be welcomed by renters across the country, SQM Research managing director Louis Christopher warned that rents are still far from cheap.
“For the past 30 days, SQM Research has recorded the largest decline in capital city rents since the days of 2020 when COVID first hit the country.
“It should be noted of course that rents are still very high and this retracement is minor compared to the massive rise in rents recorded around the country since 2021,” Christopher said.
Meanwhile, rental vacancy rates remain stubbornly frozen well below the 3 per cent mark generally considered “healthy”.
The national vacancy rate currently rests at 1.3 per cent, with Canberra recording the highest vacancy rate (2.2 per cent) and Perth and Adelaide continuing to see extremely tight vacancy rates of under 1 per cent.
In the pricey cities of Sydney and Melbourne, rental vacancy rates sit at 1.7 per cent and 1.5 per cent respectively – broadly consistent with last year’s vacancy rates.
“The rental crisis is still not yet over as we have recorded an ongoing low national vacancy rate,” observed Christopher.
Looking forward, the managing director forecast that rents will continue to moderate in the coming months, but are unlikely to fall sharply any time soon.
“As a research house, we do believe the market rental rises of 10–20 per cent per annum are now over,” he remarked.
Australia sees largest rent declines since COVID – Real Estate Business
STAFFING CHANGES
Jesse and DB Philpott have amicably parted ways. Over the last year Jesse has worked closely with David Philpott in the management of your property and David will continue with the day-to-day management assisted by Rebecca Soloman
Thank you for your ongoing support!
Regards David, Benjamin & the Team at DB Philpott Real Estate
