The biggest news of the week was the decision by the Reserve Bank Board to keep official interest rates on hold at 4.5%. Following a number of speeches during the last month by senior bank officials who highlighted that interest rates would most likely need to increase, most commentators had been predicting a 25 basis points increase however, this did not come to fruition. Looking back at the data releases over the last month, property value growth was weak as was housing finance, building approvals and growth in retail trade was sluggish. The next key piece of data that will provide some guidance on where interest rates are going will be the release of CPI Data on 27 October. This information will factor most heavily in the RBA’s next interest rate decision on Melbourne Cup Day.
Data released by the ABS late last week detailing building approvals for August 2010 showed continuing weakness, in particular for new private sector house approvals. Over the month, total approvals fell by -4.7% with private sector house approvals down -4.3% whilst private sector unit approvals increased by 1.4%. Overall, approvals are once again beginning to
trend lower which is a worrying sign for a recovery in the home building sector, particularly if interest rates start increasing again.
The RP Data Quarterly Rental Review was released this week and the results showed that rental rates were flat over the quarter both nationally and across the capital city markets. With rental markets tightening, the prospect of higher interest rates and fewer first home buyers, RP Data anticipates that
landlords will be looking to increase rents upon lease renewal.
SYDNEY (Dow Jones)--
Australian house prices will rise for the next three years on the back of the country's robust economy, an industry report commissioned by a large Australian mortgage insurer said Tuesday.
The report, commissioned by QBE and written by BIS Shrapnel, forecast median house price growth of 20% in Perth, Sydney and Adelaide over the next three years with prices in every major city in Australia rising by 9% or more.
http://online.wsj.com/article/BT-CO-20101011-710974.html
Things are definitely cooling off in a downward trend. Classic perfect storm if interest rates increase and landlords try to gain higher returns by squeezing the tenants for more money. Aussie dollar is punching big holes in the budget means company profits to be down thusly affecting tax income for the Govt.
Interesting times ahead !!