Sydney’s market is doing most of the heavy lifting as dwelling values in the capitals rose over May... Australia’s Swedish lesson sees rate cuts in play despite growth...
Home values rise as Sydney bounces back
Dwelling values across Australia’s capital cities increased over the month of the May, with Sydney’s market doing most of the heavy lifting.
Released yesterday, CoreLogic RP Data’s May Home Value Index revealed that the median combined capital city dwelling price increased 1.6% to $580,000 over the month of May, with house prices improving 1.8% compared with a 0.1% rise in unit values.
The May increase means home values have risen 5% during the 2016 calendar year and are currently 10% higher than they were at the end of May 2015.
During May, Sydney was the best performing market with its median dwelling price increasing 3.1% to $782,000 over the month.
Canberra was the next best performer with its median dwelling price up 2.5% during May to $550,000, while the median dwelling price in Hobart increased 2.2% to $335,000.
Perth was the worst performer over the month, with its median dwelling price falling 2.7% to $506,000, while both Brisbane and Adelaide saw small price increases of 0.1%.
(Your Investment Property)
Australia’s Swedish lesson sees rate cuts in play despite growth
(Bloomberg) --Australia’s fastest growth in four years is unlikely to dissuade policy makers from cutting interest rates to fan inflation: Just look at Sweden.
The Nordic nation grew an annual 4.2 percent in the first quarter while running negative rates and a bond-buying program to revive inflation that’s failed to reach its target for half a decade. Data from Down Under Wednesday showed growth of 3.1 percent from a year earlier, yet the Reserve Bank of Australia cut in May after inflation fell below its target range and is likely to stay there for the remainder of 2016.
“The problem for the RBA is that while the headline number looks really good, none of that is really inflation-making growth because it’s from net exports,” said Sally Auld, head of fixed-income and currency strategy for Australia at JPMorgan Chase & Co. “Exports look good on paper, but they’re not going to help them overcome the structurally lower inflation story in Australia.”
Australia isn’t alone. As central banks from Switzerland to Japan drive their policy rates below zero, the absence of inflation in economies flooding the ether with money is striking. Annual consumer prices in Japan fell in March and April, while much of Europe remains mired in deflation. Even in the U.S., where gross domestic product is growing faster than 2 percent annually, there was virtually no inflation last year.
Auld expects Australia’s central bank to wait for late July’s CPI release and then cut the cash rate by 25 basis points at the following meeting. She says the stronger headline economic growth means Governor Glenn Stevens doesn’t have to rush to ease at next week’s decision. She predicts her terminal rate of 1 percent will be reached in the second quarter of next year.
Dwelling values across Australia’s capital cities increased over the month of the May, with Sydney’s market doing most of the heavy lifting.
Released yesterday, CoreLogic RP Data’s May Home Value Index revealed that the median combined capital city dwelling price increased 1.6% to $580,000 over the month of May, with house prices improving 1.8% compared with a 0.1% rise in unit values.
The May increase means home values have risen 5% during the 2016 calendar year and are currently 10% higher than they were at the end of May 2015.
During May, Sydney was the best performing market with its median dwelling price increasing 3.1% to $782,000 over the month.
Canberra was the next best performer with its median dwelling price up 2.5% during May to $550,000, while the median dwelling price in Hobart increased 2.2% to $335,000.
Perth was the worst performer over the month, with its median dwelling price falling 2.7% to $506,000, while both Brisbane and Adelaide saw small price increases of 0.1%.
(Your Investment Property)
Australia’s Swedish lesson sees rate cuts in play despite growth
(Bloomberg) --Australia’s fastest growth in four years is unlikely to dissuade policy makers from cutting interest rates to fan inflation: Just look at Sweden.
The Nordic nation grew an annual 4.2 percent in the first quarter while running negative rates and a bond-buying program to revive inflation that’s failed to reach its target for half a decade. Data from Down Under Wednesday showed growth of 3.1 percent from a year earlier, yet the Reserve Bank of Australia cut in May after inflation fell below its target range and is likely to stay there for the remainder of 2016.
“The problem for the RBA is that while the headline number looks really good, none of that is really inflation-making growth because it’s from net exports,” said Sally Auld, head of fixed-income and currency strategy for Australia at JPMorgan Chase & Co. “Exports look good on paper, but they’re not going to help them overcome the structurally lower inflation story in Australia.”
Australia isn’t alone. As central banks from Switzerland to Japan drive their policy rates below zero, the absence of inflation in economies flooding the ether with money is striking. Annual consumer prices in Japan fell in March and April, while much of Europe remains mired in deflation. Even in the U.S., where gross domestic product is growing faster than 2 percent annually, there was virtually no inflation last year.
Auld expects Australia’s central bank to wait for late July’s CPI release and then cut the cash rate by 25 basis points at the following meeting. She says the stronger headline economic growth means Governor Glenn Stevens doesn’t have to rush to ease at next week’s decision. She predicts her terminal rate of 1 percent will be reached in the second quarter of next year.
