top of page

TIP: new home sales bounce, housing shortage looming, no more RBA rate cuts for now

It's not just existing home sales enjoying a new renaissance


That's the word from the Housing Industry Association, which tells us new home sales have increased for two consecutive months - everywhere except NSW, that is. The Premier state saw a 12.1 per cent decline in new home sales last month.


The big winners in September were SA (18 per cent), WA (13.6 per cent) and VIC (11 per cent). Approvals, however, are still down across the board; we're talking a 16.2 per cent drop over the past 12 months. The recent pick-up in sales is expected to show up in new building approvals over the coming months.


The regular HIA report looks at all types of housing - which means the issues impacting apartment sales and new project starts in NSW would have a lot to do with those figures.


The pundits will be hoping new home sales pick up sharpish, as talk of a housing shortage in key markets including Sydney and Melbourne starts to escalate. It seems to be reaching a point of generally accepted fact that demand will outstrip supply as soon as next year; commentary like this has been dropping more regularly since RBA deputy governor Guy Debelle (pictured) warned us as such a couple of weeks ago.


Anyone who's waiting for more movement in interest rates before pulling the trigger on a new home purchase, should perhaps reconsider. Yesterday's in-line inflation update showed a slight increase, and matched the RBA's predicted 1.6 per cent target for 2019. Consumer Price Index growth actually improved in the year to September.


The markets are betting that's all she wrote for RBA official cash rate cuts. A short time ago, the markets were tipping we'd be at 0.25 per cent interest rates by next August; now, they're betting we won't be seeing any more RBA cuts between now and the end of 2020, period.


Cue the navel-gazing. This piece argues that if RBA governor Philip Lowe wasn't so fixated on inflation in the first place, we wouldn't be at 0.75 per cent interest rates. That old academic chestnut of looking to Norway for economic guidance must drive the financial boffins of Martin Place mad.

5 views0 comments
bottom of page