Interest Rates Hold Steady
The RBA cited lowering unemployment and subdued inflation pressures as key factors.
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Once again, the Reserve Bank of Australia (RBA) has maintained the current policy settings, leaving interest rates on hold for another month, aligning with plans to leave rates unchanged for the foreseeable future.
Dr Philip Lowe in his statement on the RBA’s decision has cited the global economy’s continued recovery from the pandemic and stronger than expected economic results locally– which are predicted to continue – particularly with unemployment falling to 5.6% in March as justification for the decision.
The RBA expects the unemployment rate to be at 5% by the end of 2021, and around 4.5% by the end of 2022.
On housing prices, and the recent boomtime results, Dr Lowe said, “Housing markets have strengthened further, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers.”
Yet despite positivity surrounding the market’s recovery, Dr Lowe followed with a warning, stating, “Given the environment of rising housing prices and low-interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”
The board also reiterated its commitment to “maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target,” Dr Lowe said.
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CommSec research reveals this state is leading the country in economic growth, unemployment, construction and dwelling starts
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South Australia is currently the strongest state or territory economy in the country, with economic activity 9.1 percent above its decade-average in the December quarter, according to CommSec research. NSW was second with economic output running 8.6 percent above its long-run average, followed by Victoria with 8.5 percent, the ACT at 8.3 percent and Western Australia at 6 percent.
Economic activity in both Queensland and Tasmania was 4.5 percent above average while the Northern Territory underperformed its long-term average by 0.5 percent.
The CommSec research ranks states and territories on several key economic metrics and compares the latest quarterly data with each area’s decade average. South Australia ranks first on four of the eight key indicators. They are economic growth, unemployment, construction and dwelling starts.
Western Australia ranks first on population growth and business and equipment investment. Population growth has been a key element in Perth and regional Western Australia becomingthe country’s hottest property markets over the past 12 months. CoreLogic figures released this week show home values are up 21.1 percent in Perth and 13.3 percent in the state’s regions.
Despite high inflation, retail spending remained above the long-term average in all states and territories in the December quarter. The ACT led with retail expenditure 12.2 percent higher than its long-term average, followed by Western Australia with 11.3 percent, Victoria at 11.2percent and Queensland at 11.1 percent.
Queensland is in the top spot for new home loans. Propelling this is very strong internal migration and a doubling of the First Home Owners Grant to $30,000 from 20 November last year. New home loans issued to first home buyers in November surged to a 15-month high, according to data from the Australian Bureau of Statistics. Queensland is currently the second strongest housing market, with home values up 16.1 percent in Brisbane and 11.2 percent in regional areas over the past year.
In all states and territories except the Northern Territory, housing finance commitments remained above decade averages in the December quarter. The value of home loans in Queensland was 21.1 percent higher than the state’s long-term average. The next strongest was Western Australia, up 17.5 percent, South Australia, up 14.2 percent, and the ACT, up 12 percent. The new CoreLogic data reveals 15 consecutive months of growth in the national median price, despite high interest rates.
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