News
Wealth Pi Fortnightly Economic Snapshot
Interest Rates
Probability of rate increase at next RBA meeting in August 2024 is at 25% for 25bp.
RBA
The Reserve Bank of Australia has decided to maintain the cash rate, citing persistently high inflation, tighter-than-expected labour market conditions, and a gradual reduction in economic growth, with inflation expected to return to the target range by the second half of 2025 amid global economic uncertainties and subdued domestic demand.
Australian Markets
In June 2024, Australia’s unemployment rate slightly increased to 4.1% despite a rise in employment by approximately 50,000 people. The participation rate also rose to 66.9%, closely approaching the historic high of 67.0% from November 2023. The employment-to-population ratio increased to 64.2%, indicating a nearly peak historical level. The labor market remains tight, with job vacancies remaining high, which suggests continued robustness despite the modest rise in unemployment.
Global Markets
US:
The proposed national rent control policy by the White House, which includes a 5% cap on rent increases for corporate landlords, aims to address housing affordability but could ultimately worsen it by exacerbating the housing supply shortage, as it would discourage developers from building new units.
UK:
The expected first Bank of England Base Rate cut in Autumn, coupled with political certainty from the new government, is anticipated to boost the housing market, despite a slight dip in asking prices and stable buyer demand amid ongoing high mortgage rates.
Property
There is a slowdown in housing value growth across Australia as of July 2024, with national home value growth easing from 0.7% to 0.5% over the last month. High inflation and increased stock levels are impacting demand, particularly in more expensive markets like Sydney and Melbourne. Despite this slowdown, mid-sized capitals like Perth, Adelaide, and Brisbane continue to show resilience, although signs of waning demand are beginning to emerge.
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