Finally some potentially good news for NSW property. It would appear that some of the other states are performing quite ordinarily. A report a colleague forwarded to me that was compiled by Citi showed that there had been an overall decline in owner occupier finance.
This was a result of interest rate rises starting to take effect.
However, in NSW there was a 1.5% gain.
The report goes on to pose a question re interest rates:
“What’s the RBA to do? This data presents something of a headache for the RBA. Lower housing activity suggests that the current level of interest rates is still adversely affecting potential buyer behaviour. This lowers economic growth, other things being equal and reduces inflation pressure. However, it also puts more pressure on rents, which are already well above the pace of inflation and set to stay there (Figure 7). This the RBA cannot ignore”
Thus the bottom line as I interpret it is that whilst many economists are sitting on the fence in relation to a 50/50 chance of an interest rate rise – some of the recent economic data may be tending towards another ‘hold’.
I personally think that with the added pressures of recent floods, and the increasing energy prices and general cost of living an interest rate rise could be too much for other states. NSW can finally have a bit of time in the sun while the other states go through some hardship – which is a different scenario from what we have seen for a number of years.
Email me at firstname.lastname@example.org if you would like a copy of this report.