It is hard to recall a time when the local apartment sector had so many economic factors that directly affected supply and demand.
This is partly due to the fact that they are at the end of the federal election campaign, where both major parties have made a living, especially the problems faced by first home buyers, the mainstay of their campaigns and policies.
Only for the second time in the run-up to the federal election did the Reserve Bank of Australia (RBA) decide to begin returning interest rates and monetary policy with a modest increase in the target cash rate by 25 basis points to 35 basis points. .
The RBA board said it was time to begin withdrawing part of the emergency cash support that was introduced to help the Australian economy during the COVID-19 pandemic, due to the resilience of the economy and rising inflation to higher-than-expected levels.
The good news is that the RBA Council has stated that there is evidence that wage growth is rising, and given the very low level of interest rates, it is time to begin the process of normalizing monetary conditions.
The resilience of the Australian economy is particularly evident in the labor market: the unemployment rate has fallen to four per cent in recent months, and labor force participation has risen to a record high.
Both vacancies and vacancy announcements are also at a high level, and the unemployment rate is expected to fall to about three percent by early next year, remaining at about that level thereafter. This would be the lowest unemployment rate in nearly 50 years, according to the RBA board.
A modest increase in interest rates – from a record low rate – should not lead to a significant increase in the average mortgage repayment. This, of course, will not make the typical mortgage payment higher than many people currently have to pay for rent, and lack of supply and high demand for housing remain a problem for the local market.
I have said before that the main problem facing most first home buyers, including those who want to take advantage of security, convenience and affordability, is to save enough money to deposit to qualify for a loan from a large financial institution. . Current mortgage payments are much less of a problem.
That’s why the Liberal National Coalition and the Australian Labor Party have made helping people with the deposit their main policy driver. As the election campaign goes fast, there is no point in explaining the current policy, but I urge you to look closely at what may be offered after 21 May.
Another issue is the supply of available stocks.
According to Urbis, at the end of last year there were 972 new completed apartments, and this number would be significantly reduced by the time a small number of new stocks have been depleted since then, and sales were stable in the first quarter.
These sales were facilitated by the return of investors to the market.
While Western Australia still has the highest ratio of homeowners to first home buyers in Australia for new funding (34.4 per cent) – still well above the long-term average – the latest figures from the Australian Bureau of Statistics for the March quarter show that Investors returned strongly to the market more than 20 percent above the long-term average.