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Property market update – July 2022


Big Banks predict cash rate to reach over 3% before Christmas

Major Bank ANZ has warned Australian borrowers they could be facing four more rate hikes over the next four months that will take the official cash rate above 3 percent before Christmas (currently 1.35%). “Strong momentum in the labour market and the clear upside risks to inflation” would force the RBA to move to a “restrictive setting” by late 2022, “more than 12 months earlier than our previous forecast”.

On the flip side, however, CBA is predicting that as the economy slows the RBA may end up cutting rates by late 2023.

Inflation at 22-year high

Australia’s annual inflation rate was reported at 6.1% in July, the highest reading since September 2000 when the GST was introduced, and over double the top of the RBA’s target band of 2-3%. With the figure being slightly less than forecast, this makes it less likely that the RBA will increase the cash rate by 0.75% in August, however, a 0.5% increase is almost a certainty.

Unemployment rates fall to a near 50-year low

Following impressive data released this week from the ABS, unemployment rates have dropped 0.4 percentage points down to 3.5%, the lowest since August 1974.The dramatic drop in unemployment reflects more Australians securing employment. Together, these factors create an increasingly stronger labour market, with higher demand for engaging as well as retaining workers. 

Auction markets continue with stable results

Weekend auction markets continue to report results generally similar to those recorded over recent weeks – although buyer and seller activity has clearly moderated compared to previous months’ outcomes.

Sydney preliminary auction clearance rates have remained steady at 57.9% at the weekend ending July 24, however, experts suggest this number is likely to fall under 50 once the remaining auction results are collected. 
Auction clearance rates remain at the lowest levels since April 2020, however, as we enter the Spring selling season and warmer months, it’s likely these should increase.

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