Tuesday, August 2, 2016

Australian Cash Rate Now 1.50%

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.50 per cent, effective 3 August 2016.
The global economy is continuing to grow, at a lower than average pace. Several advanced economies have recorded improved conditions over the past year, but conditions have become more difficult for a number of emerging market economies. Actions by Chinese policymakers are supporting the near-term growth outlook, but the underlying pace of China's growth appears to be moderating.
Commodity prices are above recent lows, but this follows very substantial declines over the past couple of years. Australia's terms of trade remain much lower than they had been in recent years.
Financial markets have continued to function effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.
In Australia, recent data suggest that overall growth is continuing at a moderate pace, despite a very large decline in business investment. Other areas of domestic demand, as well as exports, have been expanding at a pace at or above trend. Labour market indicators continue to be somewhat mixed, but are consistent with a modest pace of expansion in employment in the near term. 
Recent data confirm that inflation remains quite low. Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.
Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 is helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.
Supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished. 
Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting.

Friday, July 1, 2016

Perth 7.4% House Price Decline in 18 months

If you have been listening to the real estate agents, you would be thinking that the house prices are about to go back up again. Unfortunately, the last 18 month has seen a 7.4% drop in house prices in Perth. We are the worst performing market in Australia.

Over six months, house prices have dropped 4.7%, and 7.4% in the last 12 months. The closest market to Perth is Darwin but they have only dropped 1.1%. How's the east coast doing? Sydney is up 11.3% and Melbourne is up 11.5% over the last year. The vacancy rate is sitting at 4.7%, also the worst in the country.

15% of Perth Houses Selling at Loss

Compared to last year, two times more apartments and three times more houses have sold at a loss this year according to CoreLogic RP Data. 23% of apartments and almost 15% of houses sold at a loss in Perth compared to 11.7% and 5.1% last year indicating that the pressure is increasing on people to liquidate. Most of these houses and apartments were held for about 5 years when the mining boom was at its highest.

For those looking for a home in Perth, the time could be right to make an offer.

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