Property Market Essentials - May 2022
This Month in Review
The Australian Bureau of Statistics announced the quarterly Consumer Price Index, aka inflation, has jumped to 5.1 per cent this quarter. Michelle Marquardt, ABS Head of Prices Statistics, said this was “the largest quarterly increase since the introduction of the goods and services tax in 2000”.
The hike in inflation now leaves the door open for the RBA to increase the interest cash rate from its record low of 0.1 per cent, something that the RBA said wouldn’t occur until 2024.
As of Tuesday May 3, the RBA has lifted the official cash rate to 0.35%, the first rate rise in more than a decade, with more rises expected in the coming months.
In addition to the increased inflation rate and cash rate, pressure is building in the economy due to extensive lockdowns in China, resulting in supply chain issues and record-high oil prices.
Highly indebted households and those buyers who jumped into a record-high market are already beginning to feel the strain of the increased cost of living.
With cash rate increases expected every month well into 2023, the big question for investors and prospective home buyers alike is how high can interest rates go, and what impact will this have on the broader real estate market?
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The Market Essentials Report is compiled by Buyside on behalf of Loanscape. Founded by Josh Masters, Buyside are registered buyer's agents with on the ground expertise in the Sydney and Brisbane property markets.
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Disclaimer: This article is intended to provide general news and information only. While every care has been taken to ensure the accuracy of the information it contains, neither Loanscape nor its employees can be held liable for any inaccuracies, errors or omission. All information is current as at publication release and the publisher takes no responsibility for any factors that may change thereafter. Readers are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice.
Loanscape has today released its Borrowing Capacity Index for Q2/2024. It shows that the borrowing capacities of Australian individuals and families have stabilised after the sharp decline over the past 2 years. Lower income borrowers continue to be disproportionately impacted by interest rate increases: the family income required to qualify for the average size loan in Australia is 35% higher than 2 years ago.