As expected, the Reserve Bank of Australia (RBA) decided to keep the official cash rate at 0.10 per cent this month, continuing an eight-month holding pattern.
This decision was what most experts were predicting and was in line with RBA Governor Dr. Phillip Lowe’s statement in June. At that time, he said the cash rate would likely stay the same until 2024 to allow the labour market to tighten enough to generate wage growth.
Lowe stated that the RBA would not increase the cash rate until actual inflation was sustainably within the 2 to 3 per cent target range.
Australia’s national dwelling values rose 13.5% over FY21, with 1.9% growth in June alone, making this the highest annual growth rate seen since April 2004, according to CoreLogic’s national Home Value Index.
Eliza Owen, CoreLogic’s Head of Research for Australia, explains what’s driving this level of demand:
“In May, the unemployment rate fell to 5.1%, and the underutilisation rate fell to 12.5%, the lowest level since February 2013. Consumer confidence remained elevated through June, although down from the recent April highs. Elevated savings accumulated through COVID-restrictions last year, along with a more confident consumer sector, has encouraged consumption of larger goods, such as housing. This has all occurred against a back-drop of continued low mortgage rates, which is one of the most significant demand drivers.”
All dwellings | Auctions | Clearance rate | Private sale | Monthly home value change |
---|---|---|---|---|
VIC | 666 | 85% | 1487 | ▲ 1.47% |
NSW | 429 | 91% | 1730 | ▲ 2.58% |
ACT | 46 | 96% | 62 | ▲ 2.35% |
QLD | 110 | 64% | 1378 | ▲ 1.93% |
WA | 3 | 67% | 697 | ▲ 0.16% |
NT | 0 | 0% | 17 | ▲ 0.83% |
TAS | 1 | 100% | 169 | ▲ 3.01% |
SA | 59 | 95% | 376 | ▲ 1.64% |
With the latest COVID-19 lockdowns, it’s unclear how the property market will perform in July. But with the spring buying season just around the corner and a potential rebalancing of the market, anything is possible.
If you’re considering buying in this market, get in touch with us now to arrange your home loan pre-approval, so you can act quickly and negotiate with confidence when the right property comes up. Give us a call to chat about your plans.
Additional sources
CoreLogic RP Data Daily Home Value Index: Monthly Values
www.realestate.com.au
Minutes of the Monetary Policy Meeting of the Reserve Bank Board
Statement by Philip Lowe, Governor: Monetary Policy Decision