Interest rates: many economists predict a cut
The Reserve Bank of Australia will announce its latest decision on interest rates today and many economists are predicting a cut. Areas of weakness are causing greater concern than a housing bubble currently including the mining industry, jobs market, inflation and the decision of China to cut its rates over the weekend. A cut in interest rates to 2.0 per cent is by no means a certainty though, and neither is it guaranteed that any new cut would be passed on by lenders. We’ll find out the RBA decision at 2.30pm (AEDT.)
Source: ABC News
Prices remain strong especially in Sydney & Melbourne
New figures show the continued strong gains in home prices, particularly in Sydney and Melbourne. The February Home Value Index from CoreLogic RP Data reveals a 0.3 per cent rise prices for the combined capital cities making growth of 8.3 per cent over 12 months. While this represents a moderation of growth from January (1.3 per cent per cent) and December (0.9 per cent) head of research Tim Lawless says the impact of lower mortgage rates is yet to be felt in prices but is evident in activity: “Auction clearance rates [are] surging to the highest levels we have seen since 2009 and valuation activity across CoreLogic RP Data valuation platforms reaching new record highs based on daily averages over the second half of February."
The regional differences seen in previous months continue to show a stark contrast. Twelve-month price gains remains strongest in Sydney (up 13.7 per cent to end of February) and Melbourne (up 7.4 per cent) with Brisbane not too far behind (5.9 per cent). There were lower gains for Adelaide (3.4 per cent), Canberra (1.8 per cent) and Darwin (1.6 per cent) while Perth and Hobart achieved increases of 0.7 and 0.6 per cent respectively over 12 months. Monthly gains were strongest in Sydney (1.4 per cent) and Canberra (1.3 per cent) with Melbourne and Adelaide gaining 0.2 per cent. The three other capital cities recorded declining values with Brisbane down 0.8 per cent, Hobart down 0.9 per cent and Perth dropping by 2.2 per cent.)
Source: CoreLogic RP Data
New home sales continue to edge higher
The thirst for new homes remains unquenched according to data from the Housing Industry Association. January’s figures show an increase in sales of 1.8 per cent and while modest it signals a good start to the year. There are however differences in housing types as HIA chief economist Harley Dale explains: “The January new home sales result reflected a 9.9 per cent rise in ‘multi-unit’ sales and a 0.1 per cent increase in detached house sales. There is an upward trend evident for multi-unit sales, but sales for detached houses are essentially flat-lining.” He also notes that there is disparity in sales activity on a state-by-state basis: “Detached house sales appear to have peaked in New South Wales and Western Australia, but the modest easing is from a very high starting point. Victoria and Queensland are displaying a modest upward trend. Detached house sales are continuing a year-long downward trend in South Australia.”
Source: Housing Industry Association
Collections: Mortgage News
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