Interest rates are likely to remain on hold until at least November. Economists are predicting the Reserve Bank of Australia won’t budge on interest rates again until inflation figures for the September quarter are released.
These don’t come out until October 23, which means any chance of a further cut is now likely to be the Melbourne Cup day. NAB Bank is predicting one more cut this year in November, following by another early next year – but other economists are now suggesting we could already be at the bottom of the rate cut cycle, with the dollar dropping and data from the US and Europe improving. Some variable rates are now being offered below five per cent so it’s fantastic for investors right now. It would appear that housing is becoming more affordable.
Housing Industry Association says housing affordability has improved in the June quarter by 4.4 per cent.. or to an index level of 72.8 There’s also a substantial increase on affordability since mid 2012, thanks to low interest rates more than offsetting any growth in house prices. Homes in Brisbane, Hobart and Adelaide are especially more affordable and relatively new housing affordability is now emerging out of the Sydney and Perth markets, despite the Sydney market picking up very quickly. Finally while housing is becoming more affordable, rents are rising.
A report by the Australian Bureau of Statistics shows landlords who own property in cheaper areas around Australia seem to be benefiting most.. with lower income households that are renting now spending about 30 per cent of their weekly income on rent.
The number of households renting has also increased from 18 to 25 per cent – so it seems more people are now renting and also paying more for rent… at a time when housing is actually becoming more affordable.