Australian Autumn Market Update

Australian Autumn Market Update

RBA: May 3 2011, cash rate unchanged at 4.75 per cent

On May 2nd 2011 the ABS (Australian Bureau of Statistics) released the March 2011 House Price Indexes: Eight Capital Cities report (to see report go here).

The ABS figures from the previous quarter to the March quarter show a decline in house prices. The capital cities with the highest drop have been Sydney with a decline of 1.8%, Melbourne and Bris-bane with a decline of 2.5% respectively. The ABS’s data show that the majority of the price index decline is in the $600k-$1.5 mil price cluster.

Dec Qtr 10 to Mar Qtr 11		Mar Qtr 10 to Mar Qtr 11
Established house prices	% change		% change
Weighted average of eight capital cities	-1.7		-0.2
Sydney	-1.8		0.8
Melbourne	-2.5		1.1
Brisbane	-2.5		-3.6
Adelaide	-1.0		0.9
Perth	0.5		-3.2
Hobart	0.4		0.6
Darwin	-1.0		0.5
Canberra	-0.4		1.1
(Source ABS)

The RBA’s latest decision yesterday and again in April was to hold the cash rate at 4.75%. The RBA’s governor Glen Stevens cited borrowing costs to be “a little above average levels” after seven increases from October 2009 to No-vember last year (RBA).

Conversely, consumer confidence is suffering. Living costs are increasing steadily, employment growth has stalled, consumers have closed their wallets and are saving their money rather than spending, so retail revenues are signifi-cantly down, as are credit applications. The threat of inflation and the strength of the AUD are also lurking in the background.

In the last couple of months, economists revised their forecasts to predict that while the RBA was expected to hold rates in May, it may well start adjusting official interest rates by the middle of this year if the economy outside the mining sector does not improve.

There is no better time than NOW to review your individual financial circumstances.

I have noticed in the past few months the number of properties for sale in the market have increased. The ABS is telling us that prices in Sydney have decreased and the RBA has decided to leave the cash rate unchanged. To me this signals the opportunity to exercise buyer power , make the most of it! Don’t be afraid to make offers and negotiate.

Preparation is key, I cannot emphasize this enough. If you have read my newsletters and posts you will think I sound like a broken record. Prepare your financing before you go house hunting to make sure you have the right backing for the property and strategy you intend to go for.

Contact me via this blog to discuss your circumstances to provide you with peace of mind