RBA hikes as expected
The Reserve Bank of Australia hiked interest rates by 25 basis points today as expected to a cash rate target of 3.85 per cent, with another hike next month looking very possible based on the updated SOMP forecasts.
Growth and inflation forecasts were revised up, and unemployment forecasts were revised down.
Much of the media commentary today focussed on high levels of government spending as a driver of inflation, and Australia being a global outlier as a developed country with rising interest rates.
It's interesting to see how the dynamics have changed from last year, when interest rate cuts were being discussed...the Aussie dollar has surged to above 70 US cents, which may at least help to dampen inflation and slow the economy later in the year, alongside today's interest rate hike and more hawkish market expectations.
Today's hike and expectations for more to come will likely curb some of the investor activity in the housing market, but will also likely serve to constrain new housing supply a little over time.
Building approvals drop
The ABS released the building approvals for December, which fell back by -15 per cent to 15,542, seasonally adjusted following last month's spike, with attached dwelling approvals dropping -30 per cent from November to just 5,842.
Taking a step back from the inevitably noisy monthly statistics, detached house approvals are picking up some pace in Perth, but nowhere else.
Attached dwelling approvals obviously had a much weaker month in December, but have generally been grinding higher over the past year in Greater Sydney, Brisbane, Perth, and Adelaide.
Melbourne seems to have lost some private sector momentum for unit approvals, though there are some large build-to-rent developments in the pipeline for the Victorian capital.
Overall, it was a weaker set of numbers for December will do little for the short-term prospects of addressing the chronic undersupply of housing in many parts of the country.
Over the year, about 195,000 dwellings were approved in 2025, far short of the increased demand for housing driven by strong population growth.
Finally, cumulatively building approvals through FY2025 and FY2026 are running at under 80 per cent of the government's implied housing target of 20,000 new homes per month.
Quite apart from the total number of dwelling approvals, the delivery of new housing supply has been very slow at around only 42,000 to 43,000 dwellings per quarter.
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In other news, SQM Research released its latest figures for total property listings.
As usual listings picked up towards the end of January, but remained lower over the year across every capital city, and -11 per cent lower than a year earlier nationally.
Asking prices for units rose 1.3 per cent in January, to be 12.2 per cent higher over the year.
Total stock on the market remains tight, maintaining upwards pressure on housing prices early in 2026.
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