Growth revised down
Growth and inflation forecasts were revised down in the latest SOMP, with little realistic prospect of unemployment getting down to 4½ per cent any time soon.
In fact the forecasts don't even see inflation getting back to the mid-point of the target range over any time over the next three years (with the target already having been missed since 2015).
Note that these revised forecasts assume market pricing for interest rates, which means that the cash rate will in all likelihood be cut again and again down to 0.50 per cent.
And the Reserve Bank noted that if required unconventional tools will be used on top of record low interest rates.
Deutsche Bank sees the cash rate falling to 0.25 per cent before the year is out, both in Australia and in New Zealand.
Now or never
The share of first homebuyers in the market has increased to the highest in more than half a decade, and that's not too surprising given the prevailing dynamics.
In real terms and after accounting for income growth, unit prices in the capital cities have come off by 10 to 20 per cent in many cases, and then there's plenty of pent up demand given the healthy shape of Australia's population pyramid (including a demographic tsunami of 25-34 year olds).
Mortgage rates look set to be available from about 2½ per cent by next year, albeit a bit higher for first homebuyers.
And bond yields are at record lows for decades into the future, so the scare stories about a shock from rising rates have proved to be totally unfounded.
Furthermore there's even a first homebuyer deposit scheme set to kick in from 1 January 2020 for qualifying individuals.
There will of course be a good deal of warranted caution about new high-rise apartments given the recent media stories about building defects and valuation shortfalls at settlement.
First homebuyers buying established units would be well advised to commission a strata report in order to fully understand what they are buying into.
Affordability hurdle
With interest rates heading towards zero, mortgage serviceability continues to ease.
People will always say that the deposit gap will make life too hard for first homebuyers but this has never stopped incentives from working in the past, and it probably won't this time either.
Instead people will move to where they can afford, and follow the same patterns they always have, even if it's a bit later in life these days: rent, date, mate....wed, buy home, have kids.
And there's been a demographic explosion in the key first homebuyer age bracket the likes of which we've never seen before.
Although we like to think we're unique or different - especially when we're younger - in reality we tend to do quite similar things at similar stages of life.
Affordability hurdle
With interest rates heading towards zero, mortgage serviceability continues to ease.
People will always say that the deposit gap will make life too hard for first homebuyers but this has never stopped incentives from working in the past, and it probably won't this time either.
Instead people will move to where they can afford, and follow the same patterns they always have, even if it's a bit later in life these days: rent, date, mate....wed, buy home, have kids.
And there's been a demographic explosion in the key first homebuyer age bracket the likes of which we've never seen before.
Although we like to think we're unique or different - especially when we're younger - in reality we tend to do quite similar things at similar stages of life.
