#23

RBA Holds Cash Rate at 4.35% – What Does It Mean for You?

The Reserve Bank of Australia (RBA) has decided to maintain the cash rate at 4.35%, following its recent meeting. This decision comes on the heels of August's unemployment data, which indicated a steady rate of 4.2%. While this is an increase from the 3.5% unemployment rate seen in mid-2022, it signals stability in the job market.

Comparison with US Federal Reserve Actions

In contrast to the RBA's decision, the US Federal Reserve has opted to reduce its rates by 0.50%, driven by concerns over the American job market. However, in Australia, the labour market’s resilience continues to be a critical factor in the RBA's management of inflation, influencing the decision to hold rates steady.

Outlook for Rate Cuts Pushed to 2024

Earlier forecasts suggested a potential rate cut by November 2024, but with current economic indicators, this is now more likely to occur in the new year. Economists are revising expectations, citing a slower timeline for rate reductions.

Property Market Considerations

With the property market remaining active and interest rates holding steady, it may be an opportune time to reassess your financial strategy. Whether you're looking to buy, refinance, or invest, staying informed about these economic shifts is crucial to making sound financial decisions.

Stay ahead of the curve by considering how today's developments could impact your future plans.

Auction Results Hold Strong Despite AFL & Holiday Distractions

Despite the distractions of the AFL Grand Final and spring holidays, the national auction clearance rate held firm at 61.7% over the weekend. While this is a slight dip from last week’s 65.4%, it still exceeds the 2023 average of 63.1%. Listings also saw a sharp decline, with only 1,242 properties going under the hammer, compared to 2,601 the previous weekend.

Sydney Highlights

• Clearance rate: 69.7%, just below last week’s 70.7%.
• Auction listings: 1,167, up from 1,004 the previous weekend, and more than double the 545 listed at the same time last year.
• Median price: $1.79 million, up from $1.715 million last weekend.
• Top sale: A one-bedroom unit in Bondi Beach fetched an extraordinary $11 million.

Melbourne Highlights

• Clearance rate: Steady at 63.1%, identical to last week.
• Auction listings: Just 129 properties were listed, a sharp decline from last weekend’s 1,282 due to the AFL Grand Final.
• Median price: $720,000, down from last week’s $1.008 million.
• Top sale: A three-bedroom house in Thornbury sold for $1.675 million.

Other Capital Cities Clearance Rates:

• Brisbane: 48.7%
• Adelaide: 71.9%
• Canberra: 58.4%

With listings likely to increase after the holiday period, it remains to be seen how the market will respond in the coming weeks.

Rental Market Chaos: Vacancy Rates at Historic Lows!

Australia's rental market continues to grapple with tight conditions, with the national vacancy rate holding steady at 1.3% in August, according to data from SQM Research . This translates to just 13 available rental properties for every 1,000, signalling ongoing strain in the market.

Tight Conditions Driving Competition

Low vacancy rates often result in heightened competition among tenants and upward pressure on rents. However, Louis Christopher , managing director of SQM Research, highlighted that although the vacancy rate may dip even further in the coming months, a significant spike in rents is unlikely.

Rising Rents May Slow

Christopher pointed out that much of the structural shortage in housing has already been accounted for in current rental prices. As a result, the market may not see the extreme 10-20% rent increases experienced in recent years. While this provides some hope for tenants, the rental crisis is far from over, with no significant improvement expected in the near future.

Outlook: Rental Crisis to Persist

The ongoing shortage in rental properties is likely to continue, with little relief in sight. While rent increases may moderate, the overall rental market remains under severe pressure, with the supply of available properties expected to remain constrained for the foreseeable future.