Happy Holidays From the entire team at Azura Financial, we would like to take this…
DECEMBER RBA UPDATE: CASH RATE | 0.1%
The impact of the pandemic on the property market
In Knight Frank’s Q3 Global House Price Index, which tracks the movement of mainstream house prices across 56 countries and territories worldwide; Australia was ranked 5th globally in house price increase. Amidst widespread lockdowns and closed borders, the nations property market managed to boom, fuelled by Government incentives, record low interest rates and limited stock.
Australia’s annual year-on-year growth alone was 18.9% in Q3 up from 16.4% in Q2 2021, signalling the mainstream market having had eight quarters of uninterrupted positive annual growth.
What to expect in 2022
As we move towards the new year, there are predictions of a fall in house prices, however, the nation seems to be heading towards strong economic growth, paired with high business and consumer confidence, indicating we may not see a material fall in property prices. Factors contributing to a slow down in prices will be; an increase in properties for sale, interest rates rising, and heavier restrictions on lending. While APRA has increased the serviceability buffer, interest rates aren’t expected to rise until late 2023. Although we expect house prices growth to ease substantially, we still believe there will be support through 2022.
Jobs soar following ease of lockdown
According to data from the ABS, Australian employment has soared in the last month, with 360,000 additional roles being allocated in November alone, exceeding expectations of a 200,000 increase. In contrast with the last two months of rising unemployment, the nation finally saw a decline, down to 4.6% in the last month.
This data has been welcomed by policy markets, as the RBA aim to tighten the labour market to spur faster inflation, however until unemployment reaches around 4%, the RBA will continue to run low interest rates, currently predicted to last until the end of 2023.