Investors return ahead of rate cuts
Credit growth was once again solid in December, rising by 0.6 per cent for the month and 6½ over the year (considerably quicker than the 4.8 per cent seen in 2023).
Business credit growth is still humming along, rising 0.8 per cent for the month, and 8.9 per cent over the year.
Housing credit growth picked up a tick further, from 0.50 per cent in November to 0.51 per cent in December 2024.
Over the year, housing credit growth was solid at 5½ per cent over the 2024 calendar year (versus 4½ per cent in 2023).
By far the most notable takeaway from these figures was the rapid resurgence in property investors coming into the market, with credit annual growth to landlords again jumping from 4.7 per cent in November to 5.1 per cent in December.
Investors are evidently gaining confidence, anticipating high rents, a housing shortage, and lower interest rates in 2025.
Housing prices are off their peaks by -8 per cent in Hobart, -6 per cent in Melbourne, -6 per cent in Canberra, and -2 per cent in Darwin, but still the housing credit impulse remains very solid.
The aforementioned price declines were largely a result of more auctions and more available stock on the market in the selling season towards the end of 2024.
Looking ahead, markets are looking for three or four interest rate cuts this year, which should stimulate the next housing market cycle, with an investor renaissance amplifying the trends.
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The Producer Price Index figures for December 2024 eased to 3.7 per cent, down from 3.9 per cent in the September 2024 quarter, according to the ABS.
James Foster with the brilliant graphic, overlaying these statistics on the Consumer Price Inflation data:
As was the case with consumer price inflation, this is the lowest rate of price growth since 2021.
Alex Joiner of IFM Investors noted that residential construction output cost inflation has moderated, but prices still remain high, potentially making life very difficult for developers to deliver more supply in 2025.
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