Our commentary on issues important to home owners, investors and borrowers
Australia’s house prices continue to fall, driven by reduced lending capacity and rising interest rates, which currently linger between 4% and 5%. According to Capital Economics Marcel Thieliant, this trend is set to continue as central bank looks to cool inflation.
This month the Reserve Bank raised interest rates by another 25 basis points to bring the cash rate to 2.6%, contributing to a further drop in confidence amongst buyers.
Read MoreThis months interest rate rise of 0.5 per cent marked the RBA’s fifth consecutive rate rise, taking the cash rate to 2.35 per cent for September.
This takes the cash rate to its highest level since December 2014 and prompts questions of how long rate rises will continue. To date, this is the fastest interest rates have risen in 28 years as the RBA tries to curb inflation.
Read MoreThe RBA increased interest rates again this week as inflation rose to 6.1 per cent; the fastest pace in more than two decades. Meanwhile, Treasurer, Jim Chalmers, has warned us to ‘brace for pain to escape recession’ later this year.
Despite the gloomy economic forecast, there were mixed messages in the property market last month, with auction clearance rates falling below 60 per cent for the seventh straight week but prestige properties going gangbusters.
Read MoreJune saw a weakening of the housing market, particularly in Sydney and Melbourne, which are more sensitive to interest rate fluctuations. But even in Adelaide, one of the more buoyant markets of late, the pace of growth is slowing. Homeowners wanting to sell now fear they’ve ‘missed the boat’, while prospective buyers play the waiting game as housing affordability and rising interest rates become the primary concern.
Read MoreEconomists predict that the property market will continue to soften. AMP Capital’s chief economist says that Australia should expect a 10 to 15 per cent drop in house prices in some areas over the next 18 months. However, despite a weakening market, agents report that auction clearance rates remain steady, there’s adequate stock available, and for the most part, a buyer for every seller. With predictions that interest rates will increase monthly until the end of 2022, sellers may soon need to adjust their expectations.
Read MoreThe Australian Bureau of Statistics announced the quarterly Consumer Price Index, aka inflation, has jumped to 5.1 per cent this quarter. Michelle Marquardt, ABS Head of Prices Statistics, said this was “the largest quarterly increase since the introduction of the goods and services tax in 2000”.
On May 3rd, the RBA lifted the official cash rate to 0.35%, the first rate rise in more than a decade, with more rises expected in the coming months.
Read MoreLoanscape is your information resource about lending and property.
Loanscape has today released its Borrowing Capacity Index for Q3/2024. It shows that the borrowing capacities of Australian individuals and families have started to recover after the sharp decline over the past 2 years. Lower income borrowers continue to be disproportionately impacted by interest rate increases: the family income required to qualify for the average size loan in Australia is 37% higher than 2 years ago.
Loanscape has today released its Borrowing Capacity Index for Q2/2024. It shows that the borrowing capacities of Australian individuals and families have stabilised after the sharp decline over the past 2 years. Lower income borrowers continue to be disproportionately impacted by interest rate increases: the family income required to qualify for the average size loan in Australia is 35% higher than 2 years ago.
Combined dwelling values have re-accelerated across the nation in February, with all mainland capitals soaring in value. It probably comes as no surprise that Perth claimed the top spot by gaining a whopping 1.8% for the month
Loanscape has today released its Borrowing Capacity Index for Q1/2024. It shows that the borrowing capacities of Australian individuals and families continue to decline. The more modest decline in the size of average loans being taken confirms that lower income borrowers are being disproportionately impacted by interest rate hikes: the family income required to qualify for the average loan in Australia is now 32% higher than 18 months ago.
The end of the year is fast approaching, with most capitals experiencing a strong recovery on dwelling values from the downturn that culminated at the start of 2023.
The recovery is mainly due to an influx of immigration and constricted supply, which the Government is trying to remedy with its ambitious goal of building 1.2 million homes by 2029 through HAFF.
Loanscape has today released its Borrowing Capacity Index for Q4/2024. It confirms the forecast trend that borrowing capacities of Australian individuals and families are recovering from their low levels which coincided with the last of the recent increases to borrowing rates initiated by the Reserve Bank of Australia.