Weekly Market Update (1 March 2024)

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Weekly Market Update (1 March 2024)

 

  1. CBA forecast (Source: Yahoo Finance AU)

    The Commonwealth Bank (CBA) economists predict that the Reserve Bank (RBA) will make six interest rate cuts by mid-2025, starting with cuts in September this year to prevent unemployment from rising. CBA expects three rate cuts by Christmas and a total of 1.5% reduction by the end of 2024. They also anticipate further cuts in the first half of 2025. The RBA’s current forecast for unemployment rate is 4.3%, but CBA expects it to rise to 4.5% by the end of 2024. CBA CEO, however, mentioned a possibility of rate cuts being delayed until 2025 due to stronger than forecasted US inflation data. Inflation in Australia fell to 4.1% over the 12 months to the December quarter, and CBA economists expect it to fall to the top of the RBA’s 2-3% target band in the second quarter of this year.

 

  1. Widening gap between house and unit values (Source: CoreLogic)

    The pandemic and increased desire for space have led to a substantial rise in house values relative to unit values, with the house premium jumping to 45.2% or $293,950. Sydney, Melbourne, and Perth have seen significant growth in the house premium, while some cities have experienced a reduction, possibly due to homebuyers seeking more affordable housing options. Suburbs with the smallest differential in price between a house and unit could offer good investment opportunities, especially as housing affordability remains a key challenge across Australia.

 

  1. Home Value Index (Source: CoreLogic)

    In February, housing values across Australia saw a broad-based increase, with the national Home Value Index rising by 0.6%, the strongest monthly gain since October. Most regions experienced growth, with Perth standing out at 1.8%. While Sydney and Melbourne’s growth rates have leveled out, there are signs of a boost in housing confidence. The re-acceleration in value growth has been accompanied by a bounce back in auction clearance rates and a rise in consumer sentiment. However, the pace of gains is still below last year’s highs, and factors like affordability constraints and a cautious lending environment are likely to limit value growth in the near term.

 

  1. Queensland Home Prices (Source: REIQ)

    The Real Estate Institute of Queensland (REIQ) reported stable gains in median house prices across the Sunshine State, with Brisbane leading growth in the last quarter of 2023. The CEO of REIQ noted that while property prices continue to rise, it could be challenging for first home buyers to enter the market. The institute aims for a balanced marketplace to support both home ownership and rental needs, particularly focusing on affordable housing. Real estate agents are experiencing high interest in properties at lower price points, indicating a strong demand in that segment of the market.

 

  1. National Median House Prices (Source: Dr. Andrew Wilson)

    The latest data from My Housing Market shows that the national median house price rose by 0.8% in the February quarter compared to January. Most capital cities reported increases in house prices, with Darwin leading at 6.8%, followed by Perth, Adelaide, Brisbane, Hobart, and Sydney. National unit prices also increased, with Darwin topping the list at 8.2%. However, Melbourne and Canberra saw decreases in house prices. Despite this, 2023 saw strong recovery in capital city housing markets, with double-figure price growth. The trend is expected to continue in 2024, with Sydney and Melbourne still offering value opportunities for buyers. Perth, Brisbane, and Adelaide are likely to continue reporting strong results. The housing market is supported by lower inflation, a strong economy, and high levels of migration, leading to rising rents and record-low vacancy rates in rental markets. Overall, the outlook for capital city housing market activity in 2024 is positive.

 

  1. CoreLogic Auction Results (Week ending 25 Feb 2024)
    (Total Auction / Clearance Rate)

    – Sydney: 984 / 72.2%

    – Melbourne: 1,457 / 64.7%

    – Brisbane: 168 / 70.8%

    – Perth: 7 / 71.4%

    – Canberra: 90 / 54.4%

    – Adelaide: 145 / 82.6%

    – Tasmania: 2 / 0%

    – Combined Capitals: 2,853 / 68.2%

 

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