Hi Everyone,
On Tuesday the Reserve Bank of Australia announced the outcome of its fifth board meeting of the year.
As widely predicted, the RBA announced it will be keeping the cash rate on hold at 2.5 per cent.
A survey conducted by loan comparison website finder.com.au prior to the board meeting found 16 Australian economists unanimously predicted no cash rate change. However, more than half of those surveyed predict the
cash rate will rise next year. Five respondents from Commonwealth Bank, CommSec, Urbis, HSBC and St George Bank expect to see a cash rate rise by the end of the year. Ten of the 16 participants suggested the public’s
reaction to federal Budget cuts will delay the change in cash rate, with nine stating the economy still has to grow in stability before any significant cash rate changes occur
The other point of interest is one that I often share with people when we’re discussing observable trends in the residential property market ;
Demand for inner-city housing is likely to surge in the future, while regional areas and outer suburbs will attract ever fewer buyers, according to a leading economist at the Reserve Bank of Australia (RBA). “The trade-off between space and place is getting steeper. Locating on the fringe is relatively less attractive than it used to be, and not only because the fringe is moving further out,” she said.
According to RBA data, the gap between prices in the inner ring and the outer suburbs is widening as desirability pushes up prices.
The RBA’s head of financial stability, Luci Ellis, recently spoke about Australia’s housing. These are the five points you must know about her property market speech.
| Inner-city predicted to outperform regions |
| Demand for inner-city housing is likely to surge in the future, while regional areas and outer suburbs will attract ever fewer buyers, according to a leading economist at the Reserve Bank of Australia. More>> |
Housing at most affordable level since 2002
Housing is now at its most affordable level in 12 years thanks to growth in disposable incomes, according to new research. More >>>
The Reserve Bank of Australia has today announced the outcome of its fifth board meeting of the year. More>>
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RATES FORECAST TO FALL TO 2PC By Smart Property Investor Staff Reporter Friday, 06 February 2015 Two prominent economists have praised the Reserve Bank of Australia’s decision to reduce the cash rate and have predicted at least one more cut to come. Domain Group senior economist Andrew Wilson said the Reserve Bank had made the right decision to reduce the cash rate from 2.5 per cent to 2.25 per cent. Dr Wilson also said that another cut is likely, given that the economy received minimal stimulus from the succession of rate cuts between October 2011 and August 2013.
“We haven’t had much action from cutting from 4.75 per cent to 2.5 per cent, so I’m not sure what a 0.25 per cent improvement is going to do,” he told Smart Property Investment's sister publication Real Estate Business. “Certainly the Reserve Bank had to act – it’s really the only tool in the box that we’ve got left.” Pricing gaps across product types and capital cities are widening by Cameron Kusher 30 January 2015 The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction. The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction. According to median selling prices over the three months to December 2014 published in the CoreLogic RP Data Home Value Index report, the gap between capital city house and unit prices has never been greater. As at December 2014, the capital city median house price was almost 20% higher than the capital city median house price. In dollar value terms, median house prices are $100,000 greater than unit prices. read more...
John McGrath ignites Sydney's "hot forever" inner ring debate by Jonathan Chancellor 1 FEBRUARY 2015 John McGrath has always been passionate about the property prospects of Sydney’s inner ring suburbs. But last week he went a little further, saying suburbs close to the city are becoming so desirable that they will be “hot forever” But last week he went a little further saying suburbs close to the city are becoming so desirable that they will be "hot forever". The high profile agent stopped short of declaring inner city property prices were immune from price falls. But the chief executive of McGrath Estate Agents told Fairfax Media these areas would always be attractive to buyers. "There is just no end of demand from overseas and local buyers who want to live in those precincts," McGrath said. |
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Sydney property bubble to pop when rates rise, says HSBCWednesday, 11 Feb 2015 | James Mitchell 0 · · A fresh round of cheap credit is further inflating Sydney’s investor-driven property prices. In a research note released yesterday, HSBC economists Paul Bloxham and Daniel Smith predict strong national housing price growth to continue at seven to eight per cent, driven by record-low mortgage rates. “We see Sydney prices rising by 9 to 10 per cent in 2015 and expect that, when rates do eventually rise, there is now a high risk that Sydney will see price falls,” the economists said. “Although we do not see a national housing bubble, we believe that growth in Sydney housing prices is currently running at an unsustainable pace and that any further growth is likely to be met by housing price declines in future years, when interest rates do begin to rise,” they said. A signal of the growing risk of overinflation in the Sydney market is the high level of investor demand, according to HSBC.
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JESSIE RICHARDSON | 10 FEBRUARY 2015 Melbourne growth to stand out in 2016: HSBC's Paul Bloxham Melbourne will see the highest price growth of any capital city next year, HSBC has forecast. In the latest HSBC Australia Downunder Digest report, HSBC Australia chief economist Paul Bloxham forecasts 4% to 8% price growth in Melbourne for 2016, after 7% to 8% growth in 2015. Bloxham expects that in 2015, Melbourne and Sydney will "continue to outpace the rest of the nation", noting that from its mid-2012 trough, Melbourne's housing prices have increased by 20%. Read more
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Commonwealth Bank posts 8pc half-year profit rise to $4.5b By business reporter Michael Janda Updated 11 Feb 2015, 5:49am
PHOTO: The Commonwealth Bank has posted its half-year results. (ABC News: Nic MacBean, file photo) The Commonwealth Bank has reported an 8 per cent rise in half-year profit to $4.54 billion. The bank's preferred cash measure of net profit, which adjusts for some accounting items, also rose 8 per cent to $4.62 billion. CBA said its improved profit came on the back of a 5 per cent increase in revenue, despite subdued conditions in the lending market. It also said it had lowered its cost to income ratio by 70 basis points to 42.2 per cent, as productivity initiatives continued to contain business expenses.
http://www.abc.net.au/news/2015-02-11/cba-half-year-profit-result/6084926
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Inner City predicted to Outperform
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