Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
They are real change of pace because we know the
(00:02):
Reserve Bank of Australia, well, they sort of did what
we were not expecting yesterday and they kept those interest
rates on hold, leaving the official cash rate at three
point eight five percent. Now, some experts and the big
four banks were anticipating that rate cut, and I think
a lot of homeowners were, which is now hopefully going
to happen in August. But what does it all mean
(00:24):
for the housing market? Well, joining me on the line
is Cotalities head of research, Eliza Owen. Good morning to you.
Speaker 2 (00:32):
Eliza, Hey, good morning, Thanks for having me.
Speaker 1 (00:35):
Yeah, thank you so much for your time. Now, rates
kept on hold for now. It was a mixed reaction,
wasn't it. Most of us were expecting that they were
going to be cut.
Speaker 2 (00:47):
Yeah, there was a lot of commentary leading up to
the rate decision that there's no longer the justification to
keep the cash rate at three point eight five percent,
and that's because you've had things like GDP growth come
in in the past few weeks. It showed a really
weak result for the country. We've seen things like a
monthly inflation measure which isn't as full as the quarterly
(01:08):
inflation read that we get, but it did show a
decline in inflation, and more recently we saw weak retail sales.
So all of this information told us that economic activity
was slowing, inflation was coming down. But the RBA made
it quite clear in their meeting yesterday that they wanted
to wait for the full inflation quarterly report so they
(01:29):
can really confirm that inflation is where they want it
before they move rates lower. And I think that surprised
a lot of people, but it really did reinforce that
they're erring far on the side of caution. Yeah.
Speaker 1 (01:41):
Now, I mean, what does it mean when you look
at at home values, because we're sort of hearing anecdotally
that over the last couple of weeks, you know, housing
prices of have shot up in recent weeks due to
some of those cuts.
Speaker 2 (01:56):
Yes essentially, yeah, yeah, so we had to cut back
in and we also had one in May, and what
that's done to the property market is clearly started to
push prices higher because lower interest rates mean you can
take out more debt. More debt means you've got more
to spend on housing, and we've seen that, particularly in
the Darwin market. It's Australia's most affordable capital city market,
(02:20):
and since rates moved lower on February nineteenth, we've seen
about a six percent increase in Darwin home values. That
compares to a two percent increase in national home values.
So it's clear that Darwin is essentially the biggest benefactor
in terms of value uplift from rate cuts, which is
good news for homeowners but obviously a challenge if you're
(02:42):
trying to get into the market.
Speaker 1 (02:44):
Yeah, so talk us through I guess some of what
we are saying around around the Darwin market or even
know out in Palmerstone.
Speaker 2 (02:54):
So over the past six months, we've seen not just
a consecutive set of increases in home values monthly across
the city, but we've seen a bit of an acceleration.
So the Darwin market picked up by two point one
percent in the month of May, we saw a one
point five percent increase in the month of June, and
(03:17):
the cumulative increase to date is about seven percent across
the entire market. It's a pretty broad based increase, so
we've seen uplifts in areas like Palmerston as well as
well as Darwin City and it really is just that
kind of broad based effect that I guess cheaper debt
levels can create in housing market.
Speaker 1 (03:39):
Is there a limit to how much the falling interest rates, like,
if we do see another cut, how much they can
then push those values up or I guess you know,
the market will do what the market will do.
Speaker 2 (03:51):
There is a bit of a limit because things are
quite different in the market now compared to say, the
last rate cutting cycle, which took place between the sort
of early twenty twenty to November twenty twenty, and then
the cash rate was held at zero point one percent
through to April twenty twenty two. Now back then or
(04:12):
since then, rather, market values nationally have risen by about
forty percent, So housing is much less affordable than what
it was five years ago, and that means that even
its rates move lola, it's still hard to get into
the market. We also see the consumer sentiment now is
a lot lower, and that's because of things like this
whole Trump tariff uncertainty and what that might do to
(04:34):
economic activity, and that's causing buyers to kind of hold
off big financial decisions as well. So that means that
they will be a bit of a limit to what
rate cuts do to the market. But for a market
like Darwin, I suppose the strength is its relative affordability
and there's more room for it to grow compared to
other capital cities.
Speaker 1 (04:52):
Yeah, and I mean, I guess when you look at
the housing market as well in Darwin is there's not
a huge amount of bailable at the moment either.
Speaker 2 (05:02):
That's right. So stock levels are pretty tight relative to
historic terms. So the flow of new listings coming to
market is pretty subdued. And again that could be because
it's taken a while for this market to take off,
and sellers have been holding off to wait for more
price growth before they put their property on the market.
(05:25):
Of course, there's issues with the construction sector that have
evolved across the country and really become quite clear through
the COVID period. And again I think just that economic
uncertainty might see sellers holding back a bit as well,
and that all contributes to the additional upward pressure on prices.
Speaker 1 (05:43):
Now, what are some of the forward projections, I mean,
beyond sort of now and beyond August. I guess we're
all waiting to see now whether there's kind of be
a right cut in August.
Speaker 2 (05:54):
Look, unless there's a big surprise in the inflation data.
I think it will confirm what the RBA needs needs
to know for them to move the rates lower in
their August meeting. Beyond that, most of the major economic
forecasting houses are predicting at least one more rate cut.
Of the big four banks, you've got two that are
(06:16):
predicting will finish the year with a three point three
five percent cash rate, and the other two are predicting
a three point one percent cash rate. So there's definitely
more cuts that would appear to come down the line,
you know, all else being steady, I suppose that if
we don't get any nasty inflationary surprises before the end
(06:38):
of the year.
Speaker 1 (06:39):
Well Coatalities head of Research, Eliza Owen, great to speak
with you this morning. Thank you so much for your
time anytime.
Speaker 2 (06:47):
Thank you, thank you.
Speaker 1 (06:48):
You two
They are real change of pace because we know the
(00:02):
Reserve Bank of Australia, well, they sort of did what
we were not expecting yesterday and they kept those interest
rates on hold, leaving the official cash rate at three
point eight five percent. Now, some experts and the big
four banks were anticipating that rate cut, and I think
a lot of homeowners were, which is now hopefully going
to happen in August. But what does it all mean
(00:24):
for the housing market? Well, joining me on the line
is Cotalities head of research, Eliza Owen. Good morning to you.
Speaker 2 (00:32):
Eliza, Hey, good morning, Thanks for having me.
Speaker 1 (00:35):
Yeah, thank you so much for your time. Now, rates
kept on hold for now. It was a mixed reaction,
wasn't it. Most of us were expecting that they were
going to be cut.
Speaker 2 (00:47):
Yeah, there was a lot of commentary leading up to
the rate decision that there's no longer the justification to
keep the cash rate at three point eight five percent,
and that's because you've had things like GDP growth come
in in the past few weeks. It showed a really
weak result for the country. We've seen things like a
monthly inflation measure which isn't as full as the quarterly
(01:08):
inflation read that we get, but it did show a
decline in inflation, and more recently we saw weak retail sales.
So all of this information told us that economic activity
was slowing, inflation was coming down. But the RBA made
it quite clear in their meeting yesterday that they wanted
to wait for the full inflation quarterly report so they
(01:29):
can really confirm that inflation is where they want it
before they move rates lower. And I think that surprised
a lot of people, but it really did reinforce that
they're erring far on the side of caution. Yeah.
Speaker 1 (01:41):
Now, I mean, what does it mean when you look
at at home values, because we're sort of hearing anecdotally
that over the last couple of weeks, you know, housing
prices of have shot up in recent weeks due to
some of those cuts.
Speaker 2 (01:56):
Yes essentially, yeah, yeah, so we had to cut back
in and we also had one in May, and what
that's done to the property market is clearly started to
push prices higher because lower interest rates mean you can
take out more debt. More debt means you've got more
to spend on housing, and we've seen that, particularly in
the Darwin market. It's Australia's most affordable capital city market,
(02:20):
and since rates moved lower on February nineteenth, we've seen
about a six percent increase in Darwin home values. That
compares to a two percent increase in national home values.
So it's clear that Darwin is essentially the biggest benefactor
in terms of value uplift from rate cuts, which is
good news for homeowners but obviously a challenge if you're
(02:42):
trying to get into the market.
Speaker 1 (02:44):
Yeah, so talk us through I guess some of what
we are saying around around the Darwin market or even
know out in Palmerstone.
Speaker 2 (02:54):
So over the past six months, we've seen not just
a consecutive set of increases in home values monthly across
the city, but we've seen a bit of an acceleration.
So the Darwin market picked up by two point one
percent in the month of May, we saw a one
point five percent increase in the month of June, and
(03:17):
the cumulative increase to date is about seven percent across
the entire market. It's a pretty broad based increase, so
we've seen uplifts in areas like Palmerston as well as
well as Darwin City and it really is just that
kind of broad based effect that I guess cheaper debt
levels can create in housing market.
Speaker 1 (03:39):
Is there a limit to how much the falling interest rates, like,
if we do see another cut, how much they can
then push those values up or I guess you know,
the market will do what the market will do.
Speaker 2 (03:51):
There is a bit of a limit because things are
quite different in the market now compared to say, the
last rate cutting cycle, which took place between the sort
of early twenty twenty to November twenty twenty, and then
the cash rate was held at zero point one percent
through to April twenty twenty two. Now back then or
(04:12):
since then, rather, market values nationally have risen by about
forty percent, So housing is much less affordable than what
it was five years ago, and that means that even
its rates move lola, it's still hard to get into
the market. We also see the consumer sentiment now is
a lot lower, and that's because of things like this
whole Trump tariff uncertainty and what that might do to
(04:34):
economic activity, and that's causing buyers to kind of hold
off big financial decisions as well. So that means that
they will be a bit of a limit to what
rate cuts do to the market. But for a market
like Darwin, I suppose the strength is its relative affordability
and there's more room for it to grow compared to
other capital cities.
Speaker 1 (04:52):
Yeah, and I mean, I guess when you look at
the housing market as well in Darwin is there's not
a huge amount of bailable at the moment either.
Speaker 2 (05:02):
That's right. So stock levels are pretty tight relative to
historic terms. So the flow of new listings coming to
market is pretty subdued. And again that could be because
it's taken a while for this market to take off,
and sellers have been holding off to wait for more
price growth before they put their property on the market.
(05:25):
Of course, there's issues with the construction sector that have
evolved across the country and really become quite clear through
the COVID period. And again I think just that economic
uncertainty might see sellers holding back a bit as well,
and that all contributes to the additional upward pressure on prices.
Speaker 1 (05:43):
Now, what are some of the forward projections, I mean,
beyond sort of now and beyond August. I guess we're
all waiting to see now whether there's kind of be
a right cut in August.
Speaker 2 (05:54):
Look, unless there's a big surprise in the inflation data.
I think it will confirm what the RBA needs needs
to know for them to move the rates lower in
their August meeting. Beyond that, most of the major economic
forecasting houses are predicting at least one more rate cut.
Of the big four banks, you've got two that are
(06:16):
predicting will finish the year with a three point three
five percent cash rate, and the other two are predicting
a three point one percent cash rate. So there's definitely
more cuts that would appear to come down the line,
you know, all else being steady, I suppose that if
we don't get any nasty inflationary surprises before the end
(06:38):
of the year.
Speaker 1 (06:39):
Well Coatalities head of Research, Eliza Owen, great to speak
with you this morning. Thank you so much for your
time anytime.
Speaker 2 (06:47):
Thank you, thank you.
Speaker 1 (06:48):
You two
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