Increased Investor Activity Welcomed

Published : 6 August 2015

The Real Estate Institute of Australia (REIA) believes inflationary pressures are well contained and are likely to remain so, following the June 2015 quarter CPI figures.

REIA President, Neville Sanders, said: “This should translate into a sustained period of low interest rates and be good news for home owners.

“In the June quarter, the CPI rose by 0.7% and an annual rate of 1.5%. These figures are below the RBA’s target zone of 2-3% and should not put pressure on the interest rate outlook,” Mr Sanders said.

“The annual changes for the analytical series of trimmed mean and for the weighted median were 2.2% and 2.4% respectively and compare to the changes for the 12 months to the March quarter 2015 of 2.3% for the trimmed mean and 2.5% for the weighted median.”

The housing group increased by 0.7% for the June quarter and an annual rate of increase of 2.5%.

The main increases in the June quarter for the housing group was for new dwelling purchases, which increased by 4.8%. Rents increased by 0.4% for the quarter and 1.9% for the year.

“The impact of increased investor activity in the housing sector is flowing through to lower increases in rents. The increase in the past 12 months in Sydney at 2.5% was the lowest yearly increase since the September quarter of 2006,” Mr Sanders said.

“With inflation under control combined with a slow down in housing finance, it’s reasonable to expect that the RBA Board will not be increasing interest rates in the medium term, providing a stable outlook for home buyers.”

Forecasters say it could be late 2016 before interest rates start to go up.