Housing prices lift
Every capital city saw dwelling prices rise by by at least 0.4 per cent in May, according to CoreLogic's latest statistics, while PropTrack also reported price growth to new nominal highs in response to interest rate cuts already delivered and the expectation of more to come.
Darwin has seen a burst of investors rushing the city and will likely go through - at the very least - a mini-boom this year.
While Melbourne and Canberra still have prices lower than a year earlier, overall the outlook appears set for price growth over the next couple of years across all of the capital cities and in regional Australia.
Source: CoreLogic
While previously it was the mid-sized capital cities that were blazing ahead, now growth trends have converged.
Dearth of supply
Meanwhile, although the booming growth in rents has cooled, the housing shortage hasn't really gone away, not helped by tight lending standards preventing many property developments from proceeding.
CoreLogic reported that every capital city now has a rental vacancy rate close to its historic lows.
Indeed, Justin Fabo of Antipodean Macro notes that if you look at vacancy rates on a seasonally adjusted basis then the rental market may well be tightening further again.
If this continues then the easing inflation in rents may soon be coming to an end.
Interest rates to fall further
It's been a while between drinks, but it's been nice to receive a few emails of late asking if I'd like to reduce my home loan repayments.
It's interesting to note that this doesn't always apply in other countries, but often in Australia mortgage repayments can be held at the same level even as interest rates fall, in turn allowing borrowers to build up a repayments buffer.
It certainly looks as though there will be more interest rate cuts to come as the year progresses.
ANZ-Indeed reported today that job advertisements eased to a 4-year low in May, as the labour market softens.
The Melbourne Institute also reported a seasonally soft inflation figure of -0.3 per cent this month, indicating that the disinflationary trend for Australia continues.
Source: Shane Oliver, AMP
Later in the week Australia's National Accounts for the March 2025 quarter, and they're expected to show dwindling productivity as the fragile growth in the economy has been held together by non-market roles.
The market median forecast for GDP growth is a lacklustre 0.4 per cent for the first three months of the year, barely keeping pace with the rate of population growth.
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