Heath Parkes-Hupton
2.1K posts
@heath_parkes
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All of a sudden I am more bearish on the property market With inflation already well above target before the Middle East crisis and inflation likely to increase further, I don't think this will be good news for the property market. The Reserve Bank has been trying to tread what they call a narrow path whereby they didn’t have to increase interest rates as high as other countries did coming out of the pandemic, in order to maintain a lot of the gains made in the labour market. Initially things were going well, inflation was easing, labour market gains were largely being maintained and last year the RBA was able to cut the cash rate by 25 basis points on three separate occasions. It was revealed in a speech last week that around September of last year the RBA started to realise the evidence was shifting and that financial conditions were no longer restrictive enough (interest rates were too low). Coincidentally, it was at the beginning of October when the federal government’s Home Guarantee Scheme, which offered first home buyers the opportunity to avoid lenders’ mortgage insurance if they had a 5% deposit, commenced. It took from September of last year until February of this year for the RBA to act on the evidence that the cash rate was too low and we’ve now had back-to-back increases to the cash rate. This has seen the cash rate increase from 3.6% in September, when it was first noted by the RBA that interest rates were too low, to 4.1% in March following the back-to-back increases. With the cash rate sitting at 4.1%, it is now just 25 basis points lower than its post-pandemic peak of 4.35%. Cash rate futures pricing(which measure the market expectations of the cash rate over the next 18 months) currently indicates an expectation of at least two 25 basis point increases to the cash rate this year with an additional 25 basis point increase more likely than not before the end of the year. With two increases to the cash rate in 2026 this would take it to 4.6%, the highest rate it has been since October 2011. A third increase to the cash rate would take it to 4.85%, the highest it has been since November 2008. It would be easy to point the finger here at the Middle East situation, and it is going to exacerbate these issues the longer it continues, but the reality is that inflation was too high before this situation arose (the RBA already lifted rates once before the situation). Our inflation predicament prior to this crisis easily justified two 25 basis point increases to the cash rate and possibly even more than that. ozpropertyinsights.substack.com/p/all-of-a-sud…
🚨🎙️ | Cristian Volpato: 🗣️ "I spoke to the coach (Popovic). They've been wanting to call me to Australia for a few years, but I grew up watching the Azzurri, even the coach, and I'm waiting for Italy, then we'll see how the rest goes."
Bulldogs fans are already celebrating like they've won the Premiership! Last night they shut down parts of Belmore after their win against Parramatta. #9News
