The Consumer Price Index rose 0.9 per cent in the June quarter, above market expectations. But the Housing Industry Association says the figures don't justify a near-term interest rate hike. The quarterly result took the annual headline inflation rate to 3.6 per cent.
Analysts have reversed their positive expectations for the housing market in response to that higher than expected inflation growth, tight consumer spending and US debt crisis fears spreading.
Giving weight to the sombre outlook, Australian Property Monitors data shows that home prices fell in the June quarter, with individual cities more divergent than ever before. Only Sydney's housing market has escaped a national downturn. Across the country house prices fell 0.6 per cent, with Sydney bucking the trend and rising 0.1 per cent. Melbourne and Hobart stagnated for the quarter – and that was the good news. Resource state capitals Brisbane and Perth continued their decline, shedding 1.3 and 1.5 per cent respectively. Canberra fell 2.8 per cent, Darwin lost 3.6 per cent and Adelaide was down 2.1 per cent. The reason for the fall – the market is extremely debt cautious, and investors are concerned about the state of the global economy.
Turning to vacancy rates, and SQM Research revealed a marginal increase during the month of June of 0.2 per cent to 1.9% per cent nationally for a total of just under 50,000 vacancies. The slight growth provides a little relief for renters. But with no capital cities recording vacancy rates above 3 per cent, the rental market remains incredibly tight.
