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.”
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* Monthly Home Values figures as of 30 June, 2021
* Australian auction results, clearance rates and recent sales for the week ending 4 July, 2021.
* The clearance rate is preliminary and current as at 12:28 pm AEST, 5 July, 2021.
With the latest COVID-19 lockdowns, it’s unclear how the property market will perform heading into the warmer months. 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 Fornaro now to arrange your home loan pre-approval, so you can act quickly and negotiate with confidence when the right property comes up. We are ready for your call!
CoreLogic RP Data Daily Home Value Index: Monthly Values
Minutes of the Monetary Policy Meeting of the Reserve Bank Board
Statement by Philip Lowe, Governor: Monetary Policy Decision
This article is for general information only.