Strong housing rebound pressures RBA
This weekend, CoreLogic’s preliminary auction results came in hot once again, with 75.3% of reported auctions clearing across the combined capital cities.
​
This up 0.9% from the previous weekend’s 74.4% preliminary clearance rate (revised to 70.7% at final figures).
​
It was also the third week in a row that the preliminary clearance rate remained above 70%:
Source: CoreLogic
Sydney and Melbourne continued to lead the way, with 78.2% and 74.4% of preliminary auction results successful. Auction volumes were also stronger, up 14% from the same weekend last year.
Domain’s preliminary auction results were similarly strong, with 79% of auctions clearing in Sydney and 74% across Melbourne:
Source: Shane Oliver (AMP Capital)
Meanwhile, CoreLogic’s daily dwelling values index continues to rebound in the face of ongoing monetary tightening from the Reserve Bank of Australia (RBA).
​
Across the five major capital cities, dwelling values have risen by 2.6% from their 7 February 2023 low, despite three 0.25% interest rate hikes from the RBA in February, March and May:
​
The strong rebound in Australia’s housing market would be causing angst within the RBA.
​
One of the main reasons why house prices are rising despite higher interest rates is because of record immigration-driven population growth.
This unprecedented population surge has driven an acute shortage of homes to rent and buy, pushing rents higher, and creating a sense of FOMO (Fear of Missing Out) in the market.
​
Rents are the second largest contributor to the consumer price index. Thereby, soaring rents are directly helping to drive up Australia’s inflation. Rising home values are also typically accompanied by a lift in consumer sentiment, which supports consumption and could potentially keep inflation higher for longer.
​
Despite the obvious weakening in the labour market, there is a risk that the RBA could hike rates further to counteract the inflationary pressures arising from the housing market, which has been caused by the Albanese Government’s extreme immigration.
​
​
Source: Australian Property (https://www.macrobusiness.com.au/2023/05/strong-housing-rebound-pressures-rba/)
​
​