Posted on Tuesday, March 4th, 2014 in by Matt Garmony
The RBA has kept the official cash rate at 2.5 percent on the basis that “monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target” with a “period of stability in interest rates” most likely going forward, reported by RBA Governor, Glenn Stevens today.
Some of the comments from the RBA Govenor, from the Board’s decision today included “dwelling prices have increased significantly over the past year”, “a solid expansion in housing construction” and “some indicators of business conditions and confidence have shown improvement”. “The US economy continues its expansion” and a “significant pick-up in growth” in Japan, with signs of recovery from recession in the Euro area.
However, we also need to consider the rising unemployment rate, weak labour demand and declining investment in the resource sector which will directly effect the Western Australian economy and future unemployment from the restructuring of the car industry and Qantas for the national economy.
Locally, building approvals have risen for the past 25 months, with a reported 5.6% increase in new home building approvals in January in Western Australia. This would be the flow on affect from the increase in vacant land sales throughout 2013. It is likely that once this surge in residential building construction is completed, the market is likely to plateau. There is also a large number of inner suburban and inner city apartment complexes either approved for, or under construction, which may create an over supply of residential investment properties when they are completed. This is compounded by the recent approval of Finbar’s 38 Level, 226 apartment development on the former ABC Television Studio site on Terrace Road Perth.
The licensed valuers at Garmony Property Consultants expect slowing market conditions for the Perth metropolitan lower end residential property market with continued subdued to stable market conditions for the middle market and slow upper end market sales turnover.