RBA Hikes Interest Rates 0.5%
The rise is the biggest one-month increase in official rates for 22 years.
The rise is the biggest one-month increase in official rates for 22 years.
The reserve bank has announced the biggest one-month increase in official interest rates in more than two decades in a bid to address the booming levels of inflation.
RBA governor Philip Lowe announced the new cash rate of 0.85%, up by half a point, following the board’s June meeting.
“While inflation is lower than in most other advanced economies, it is higher than earlier expected,” said Dr Lowe. “The board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead.”
“Inflation is expected to increase further, but then decline back towards the 2–3 per cent range next year. Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago.”
The rise is the biggest one-month increase in the official cash rate since February 2000 and only the second rise since November 2010.
The impact on housing markets is yet to be actualised from the previous month’s 0.25% increase, and with a further rise certain to have an effect, house prices remain a source of uncertainty.
“Housing prices have declined in some markets over recent months but remain more than 25 per cent higher than prior to the pandemic, supporting household wealth and spending,” added Lowe.
Elsewhere, the labour market remains strong, with an unemployment rate of 3.9% — the lowest rate in almost 50 years — a further decline in unemployment is expected according to the RBA’s forecast.
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After more than a year, prices have finally levelled out in prime central London, while outer London saw a small uptick in high-end prices from the previous quarter
The first quarter of the year brought some long-awaited signs of recovery in London’s luxury housing market, offering the first positive quarterly price growth since September 2022, according to a report from Savills on Wednesday.
After six consecutive quarterly price falls, luxury home prices in central London levelled out in the first three months of the year, with a 0.1% quarterly uptick in prices. The £3 million to £5 million (US$3.79 million to US$6.32 million) market saw a slightly larger increase of 0.3%.
Outer London’s luxury market saw greater quarterly price growth, with home prices up 0.8%, as some stability returned to mortgage costs and lured more buyers back to the market, according to the report.
All of this is evidence that the market is “in early stages of recovery,” according to Lucian Cook, head of residential research at Savills.
“The outlook for the housing market has certainly improved, partly because the mortgage market has recovered more quickly than expected,” Cook said in the report. “With the first rate cut rapidly coming into view and recessionary risks easing, greater stability has returned to the cost of mortgage debt, which has positively impacted domestic prime markets, where many buyers rely on borrowing, most notably in leafy outer prime South and West London, as well as the commuter belt.”
Outside of London, prices across the U.K. saw no quarterly growth heading into the beginning of the spring market, which is expected to bring higher levels of buyer activity in many regions.
Suburban regions saw prices dip just 0.1%, while urban areas—like Edinburgh and Glasgow in Scotland, and Bath and Oxford in England—saw prices increase by 0.6%.
Cook said regional buyers are more likely to be concerned about market uncertainty than London buyers in the lead up to the general election.
“As a result, buyers are still expected to be less committed until the dust has settled,” he said.
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