The RBA rate cut and concerns on changes to negative gearing ( a policy of the Labor Party) fueled Sydney auction clearance rates to over 80% which was not seen since May 2015. In fact, Sydney's auction clearance rates fell to around 53% in November 2015. There were discussions on how unsustainable Sydney's house prices were and fears of a property bubble affected investor sentiment.
However with the RBA delivering a rate cut earlier this month saw the return of home buyers and investors rushing back into the market trying to cash in on the plateauing house prices with cheap mortgages. Concerns also have been expressed in the investor circles on changes to negative gearing by at least one major political party which resulted in people trying to get hold of their investment property before any actual changes do take place in future. The trend indicates that the property market will bounce back and Sydney home prices will be on the rise again.
However with the RBA delivering a rate cut earlier this month saw the return of home buyers and investors rushing back into the market trying to cash in on the plateauing house prices with cheap mortgages. Concerns also have been expressed in the investor circles on changes to negative gearing by at least one major political party which resulted in people trying to get hold of their investment property before any actual changes do take place in future. The trend indicates that the property market will bounce back and Sydney home prices will be on the rise again.
INFLATION NOW THE KEY DATA FOR FUTURE RATE CUT
The debate has already started whether there is another rate cut coming soon. The dollar fell sharply following the low inflation projections outlined in the Statement of Monetary Policy published by the RBA on 6 May. We believe that the RBA will take further action if the June quarter CPI data trends below the RBA lower end of the target range of 2-3%. With commodity and oil prices lifting from their all time record low levels, the inflation data has now become the one to watch for the next RBA move. We believe that the bank will continue to hold rates until the August meeting by which time the June quarter CPI data will be released by the ABS.
MARKET DATA
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) *Iron Ore 60% MBIOI-IR index USD/t (Updated Wednesday) | As at 13-May 1.75 2.01 2.27 1.70 0.7300 0.6418 79.39 4.7586 5,328.99 2,046.61 17535.32 2,827.11 47.83 1,273.45 51.92* | As at 6-May 1.75 2.00 2.29 1.78 0.7394 0.6487 79.27 4.8107 5,292.05 2,057.14 17,740.63 2,913.25 45.37 1,288.99 58.33* |
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