Weekly auction data – Interest rates could fall further

Editorial director of Switzer
Print This Post A A A

A raft of softer data on the local and global economies has seen a big shift in the interest rate outlook over the past few weeks.

Economists are now forecasting one or two more cuts over the next 12 months, according to a Credit Suisse report, which monitors market expectations of interest rates. That report says the market implied interest rate at the end of the next year is 2.43% or 57 basis points lower than where rates are now.

This follows a slight softening in the unemployment rate to 5.6% and a steady-as-she-goes inflation rate of 2.5% for the year to March quarter, compared to 2.2% for the year to December quarter.

Easier monetary policy augers well for the housing market and data out this week – new home sales for March and the RP Data/Rismark home price index for April are both out on Wednesday – should give us further evidence of a strengthening in the residential market.

Clearance rates

In the major capital cities, auction rates also indicate solid growth and continue to be much stronger than they were the same time last year. The clearance rate of 74% in Sydney compares to 49% 12 months ago and the number of properties sold was almost double. While Brisbane and Adelaide numbers are still soft, the numbers being sold at auction there are also much higher than they were this time last year.

Sydney had a record week for the most expensive property with a six-apartment complex that sold in Lavender Bay on the one title. The complex was reported as being auctioned as a nine-bedroom house for $8.1 million.

The most expensive property sold in Melbourne was a three-bedroom house in Elsternwick, just 20 minutes from the city centre, which went for $1.4 million.

In Brisbane, a six-bedroom house in Robertson, 13 kilometres from the city centre, was auctioned for $2.88 million.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

Also in the Switzer Super Report

Also from this edition