Rate relief in sight as inflation drops to 4.1 percent
CBA head economist says CPI came in well below the Reserve Bank’s forecast of 4.5 percent
CBA head economist says CPI came in well below the Reserve Bank’s forecast of 4.5 percent
Inflation fell to a two-year low of 4.1 percent per annum in the December quarter, according to figures released by the Australian Bureau of Statistics. This is well below the Reserve Bank (RBA) forecast of 4.5 percent, with CBA’s head economist Gareth Aird saying it “should be a straightforward decision” for the RBA to keep rates on hold at its first meeting for 2024 next week.
Michelle Marquardt, ABS head of prices statistics, said the consumer price index (CPI) rose 0.6 percent in the December quarter, which was the smallest quarterly rise since the March 2021 quarter. Annual CPI has now fallen from a peak of 7.8 percent in the December 2022 quarter to 7 percent in the March 2023 quarter, 6 percent in the June quarter, 5.4 percent in the September quarter and sharply lower to 4.1 percent in the December quarter.
The most significant price rises in the December quarter were for tobacco, up 7 percent following the introduction of the 5 percent annual tobacco excise indexation; domestic holiday travel and accommodation, up 3.9 percent; and insurance, up 3.8 percent. “The increase in insurance was due to higher premiums across motor vehicle, house and home contents insurance,” Ms Marquardt said. “Over the past twelve months, insurance rose 16.2 percent, making it the largest annual rise since March 2001.”
Housing costs rose by 1 percent over the quarter, driven by new dwellings purchased by owner–occupiers, up 1.5 percent; rents, up 0.9 percent; and utilities, up 0.6 percent. “Higher labour and material costs contributed to price rises this quarter for construction of new dwellings, Ms Marquardt said. CoreLogic head of research Eliza Owen commented that rental inflation “is finally slowing, suggesting some hope for tenants that the rental market could turn a corner in 2024, which is also indicated by CoreLogic rent measures”.
Annual goods inflation continues to moderate faster than services. December was the fifth consecutive quarter of lower goods inflation, down from a peak of 9.6 percent in the September 2022 quarter to 3.8 percent in the December 2023 quarter. Prices have even fallen in some categories over the past 12 months, such as clothing, footwear, furniture and household appliances. Annual services inflation eased for the second consecutive quarter, down from a peak of 6.3 percent in the June quarter to 4.6 percent in the December quarter.
Federal Treasurer Jim Chalmers said the government’s cost-of-living relief measures were directly contributing to a reduction in inflation. “Our cost of living policies took half of a percentage point off inflation through the year to December quarter 2023,” Dr Chalmers said. The ABS figures show that over the year, electricity prices rose 6.9 percent but would have risen 18.9 percent without the Energy Bill Relief Fund rebates. Childcare prices fell 7.2 percent but otherwise would have risen 13 percent.Rents rose 7.3 percent but would have risen 8.9 percent without the largest increase to Commonwealth rent assistance in 30 years.
Mr Aird said the inflation data would be “viewed favourably by policymakers”. He added: “The fall in the rate of inflation over the past year has been swift. The job of returning inflation to the 2-3 percent target band is not yet done. But the RBA is now on the home straight. We continue to expect an easing cycle commencing in September. We have 75bp of rate cuts in our profile in late 2024 and a further 75bp of easing in H1 25, which would take the cash rate to 2.85 percent.”
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
The Republican nominee says it would help bring down home prices, though these buyers account for a fraction of U.S. home sales
Former President Donald Trump said he would ban undocumented immigrants from obtaining home mortgages, a move he indicated would help ease home prices even though these buyers account for a tiny fraction of U.S. home sales.
Home loans to undocumented people living in the U.S. are legal but they aren’t especially common. Between 5,000 and 6,000 mortgages of this kind were issued last year, according to estimates from researchers at the Urban Institute in Washington.
Overall, lenders issued more than 3.4 million mortgages to all home purchasers in 2023, federal government data show.
Trump, the Republican presidential nominee, made his comments Thursday during a policy speech to the Economic Club of New York in Manhattan.
Housing remains a top economic issue for voters during this presidential election. Rent and home prices grew at historic rates during the pandemic and mortgage rates climbed to levels not seen in more than two decades. A July Wall Street Journal poll showed that voters rank housing as their second-biggest inflation concern after groceries.
Both major candidates for the 2024 presidential election have made appeals to voters on housing during recent campaign stops, though the issue has so far featured more prominently in Vice President Kamala Harris ’s campaign.
Trump has blamed immigrants for many of the nation’s woes, including crime and unemployment. Now, he is pointing to immigrants as a cause of the nation’s housing-affordability crisis. Yet some affordable-housing advocates and real-estate professionals said Trump’s mortgage proposal would fail to bring relief to priced-out home buyers.
“It’s unfortunate that given the significant housing affordability crisis that is widely acknowledged across most partisan lines, we are arguing about a minuscule segment of the market,” said David Dworkin, president of the National Housing Conference, an affordable-housing advocacy group.
Gary Acosta, chief executive of the National Association of Hispanic Real Estate Professionals, a trade organization, said, “It’s just another effort to vilify immigrants and to continue to scapegoat them for any issues that we have here in the United States.”
A Trump campaign spokeswoman didn’t immediately respond to a request for comment.
Undocumented immigrants in the U.S. can obtain an obscure type of mortgage designed for taxpayers without Social Security numbers, most of whom are Hispanic. The passage of the USA Patriot Act of 2001 allowed banks to use identification numbers from the Internal Revenue Service as an alternative to Social Security, extending a number of financial services to people without legal status for the first time.
Mortgage loans for undocumented immigrants are typically higher interest and borrowers include legal residents who have undocumented spouses, Acosta said. Lenders include regional credit unions and community-development financial institutions.
In his speech, Trump said that “the flood” of undocumented immigrants is driving up housing costs. “That’s why my plan will ban mortgages for illegal aliens,” he said.
Trump didn’t elaborate on how he would enact a ban on such loans.
Though mortgages for undocumented people living in the U.S. are relatively rare, residential real-estate purchases by foreign nationals are big business , especially in expensive coastal cities such as New York and Los Angeles. These sales have declined in recent years, however.
Close to half of foreign purchases are made by people residing abroad, while the other half are made by recent immigrants or residents on nonimmigrant visas, according to an annual survey by the National Association of Realtors. Many affluent foreigners buy U.S. homes with cash instead of obtaining mortgage financing.
In his Thursday speech, which focused mostly on other economic matters such as energy and taxation, Trump proposed other measures to bring down housing costs, including cutting regulations for builders and allowing more building on federal land. Similar ideas appeared in the housing policy outline Harris released in August .
The former president has spoken on housing-related issues in speeches at other recent campaign stops, including in Michigan last month, where he touted his administration’s 2020 overturn of a policy that had encouraged cities to reduce racial segregation .
“I keep the suburbs safe,” Trump said. “I stopped low-income towers from rising right alongside of their house. And I’m keeping the illegal aliens away from the suburbs.”
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.