Good news for property buyers, not so for rental property owners
Analysis of consumer price index (CPI) data by the Real Estate Institute of Australia (REIA) shows home buyers are getting things easy, while investors with rental properties aren’t exactly getting better, but they’re not getting worse either.
“The All Groups CPI, increased by 0.4 per cent in the June quarter… giving an annual increase of 1.9 per cent,” REIA president Malcolm Gunning said.
“The annual changes for the analytical series of trimmed mean and for the weighted median were both 1.9 per cent. The annual changes in the two analytical series have been below the RBA’s target zone of 2–3 per cent for the past ten quarters and suggest the continuation of historically low interest rates for some time yet.
“The Housing Group increased by 0.2 per cent for the quarter and 3.1 per cent for the year to June 2018. The major increases in the Housing Group for the year were electricity (up 10.4 per cent) and gas and other household fuels (up 7.1 per cent).”
Additionally, rents have remained consistent and unchanged, but have risen 0.6 per cent for the year, Mr Gunning added.
What this means for home buyers, Mr Gunning said, is that the combination of inflation data and the cooling house market translate to a more consistent buying process at least throughout the rest of the year.
“For home buyers the latest inflation data together with a cooling in the housing market would suggest that the RBA will hold official interest rates stable for 2018,” he said.
The news is less decisive however for rental property owners, as Mr Gunning said that the CPI indicated there has been a rise in competition through more rental properties becoming available, and in turn has kept rent growth lower than it has been previously.
“Whilst official interest rates are likely to remain stable we are seeing pressure mounting on banks to increase mortgage rates which together with the extremely cautious approach being currently taken by lenders means higher borrowing costs and runs the risk of hampering economic growth,” Mr Gunning added.
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