[[{“value”:”
Once rampant inflation could finally be coming under control, paving the way for the Reserve Bank of Australia to cut interest rates later this year or in early 2025, experts claim.
The Australian Bureau of Statistics announced Wednesday that CPI has dropped to 2.7 per cent, down from 3.6 per cent last quarter and a decades-high of about 8.4 per cent over 2022.
It is the lowest inflation rate in Australis since 2021.
It means the RBA, who have been waging a battle to tame inflation for the better part of two years, is likely in a better position to finally start adjusting rates in a downward direction in a few months.
A cut would deliver homeowners much needed relief but economists warned renters could be left in the cold waiting years for some reprieve from the explosion in rents that higher inflation helped drive.
The warnings have followed a prolonged exodus of landlords from the market over the last two years, which has drained the market of critical rentals.
Crowds gather before the inspection for a studio in Sydney’s inner west. Picture: Angelo Velardo
MORE: How much money average Aussie actually has
High interest rates have also stymied new development projects at a time of burgeoning tenant demand fuelled by record migration growth, creating a powder keg for rent rises.
Ray White chief economist Nerida Conisbee said it would take some time for tenants to get any kind of relief from that recent onslaught of higher rents.
“It’s way too late for renters,” she said, noting that rental supply could take years to catch up with demand.
“A rate cut could encourage more new investors to come into the market and slow sales of existing rental properties, which would give tenants more choice, but we need a fundamental change in construction for renters to see a material difference,” Ms Conisbee said.
MORE: Worst tradie price hikes exposed
Rents have gone up by more than $100 a week in most capitals since the start of 2023. Picture: Gaye Gerard
MORE: Truth behind Aussie OnlyFans millionaire’s $7m fortune
PropTrack economist Angus Moore said even with slowing inflation the housing market wouldn’t be out of the woods just yet.
A better than expected CPI figure “will probably give the RBA some comfort that inflation is headed in the right direction and is likely to help bring forward when they feel they can start to ease off on how restrictive monetary policy is,” Mr Moore said.
“But the release of the more-comprehensive quarterly inflation measure in a bit over a month’s time will be much more important in assessing whether this is the case.”
Mr Moore said the RBA would likely want to see a more prolonged inflation drop before it pulled the trigger on a rate cut.
MORE: Packer’s secret $100m Aus home visit after split
Pressure is mounting on RBA Governor Michele Bullock to announce a cash rate cut. Picture: NCA NewsWire
“Inflation is clearly the RBA’s key focus at the moment. While inflation has improved from where it was a couple of years ago, it is still too high, and the RBA is concerned that inflation may not get back to target even by the end of next year.
“The monthly inflation data can be a bit volatile and doesn’t cover everything the RBA looks at, so it’s certainly not going to be the only thing affecting their decision.”
The promise of a rate cut appears to already be encouraging a lift in the property market.
National mortgage brokerage Loan Market reported a 23 per cent increase in home loan applications across Australia for the start of the real estate selling season compared to the same time last year.
An increase in property listings has brought more buyers to the market since that start of September, with the brokerage group recording an uplift in home loan lodgements of 45 per cent in NSW, 22 per cent in Queensland and 17 per cent in Victoria.
MORE: Australia’s biggest bikie clubhouses: Where are they now?
PropTrack economist Angus Moore said the RBA would want to see more reliable data before it made a definitive move on rates.
MORE: Surprise way rate cut could make homeowners richer
Loan Market’s Angela Tracey said on-the-ground insights from brokers indicated the uplift in buyer sentiment was multifaceted.
“Buyers have been encouraged by the increase in market listings, offering greater choice and comparisons in their property hunt,” Ms Tracey said.
“But there’s a rising element of FOMO with the talk of future interest rate cuts likely to bring more competition to the market.”
The post Inflation shift gives Aussies new relief appeared first on realestate.com.au.
“}]]
