Property prices across the country are being held up by stronger demand, but Melbourne is an outlier as construction picks up to cool price growth.The RBA needs to watch property price data, inflation, and jobs numbers to determine which direction to move interest rates.
"Buyer demand remains strong despite interest rates sitting at 12-year highs, borrowing capacities falling and the volume of stock for sale increasing, leading property prices to rise at a faster rate than expected," PropTrack director of economic research and report author, Cameron Kusher, said.
"We got capital cities a little stronger at 6 to 7 per cent for the 2024 calendar year," ANZ senior economist Blair Chapman said.Perth, according to PropTrack research, is projected to lead home price growth again in the coming financial year, albeit at a slower pace, having risen 18.9 per cent over the full-year to date and predicted to increase a further 8 per cent to 11 per cent during calendar year 2025.
But the cost of other services like energy, education, healthcare, and banking and insurance remained elevated.Several economists have warned it puts pressure on the Reserve Bank to increase interest rates at its next meeting in August.The ANZ Bank has already pushed back its forecast for the RBA's first interest rates cut from November 2024 to February 2025.
"From there we see a steady profile of one cut per quarter back to 3.10 per cent, now reaching that point in mid-2026.""In light of a significantly stronger than expected trimmed mean inflation print for Australia in May, we now expect the RBA to hike by 25bps to 4.6 per cent at its next meeting in August," chief economist Phil O'Donaghoe noted.
As for the financial markets, they quickly moved to imply a 50 per cent chance of a quarter of a percentage-point hike from the RBA by September, up from 12 per cent before the data was released Wednesday at 11:30am AEST, with a move likely in August depending on the outcome of the full June quarter CPI report, which is due to be reported on July 31.