Interest rate cuts fuel prices but housing boom unlikely: AMP
National house prices are on the rise, on the back of interest rate cuts which are spurring on borrowing capacity with PropTrack showing national home prices rose 0.4 per cent in June and are now up 4.6 per cent on this time last year.
But while monthly gains were recorded across almost all the capitals, it might not be quite as bad as the last time the RBA cut rates, when house prices soared nearly 25 per cent in 12 months until 2021.
That is the view of AMP chief economist Shane Oliver who told NewsWire 'even worse affordability constraints' would not result in a repeat of the post-Covid price surge.
'It will be more constrained this time around. When we came out of Covid, interest rates went to zero and you could get fixed rates around two per cent and variable rates around three per cent,' he said.
'I don't think we are going to see it this time around
'Affordability was arguably better in 2020 because house prices initially fell a bit.
'So there was super duper low interest rates and prices coming off a dip which is why there was a supercharged rebound in prices.
'This time around we are seeing the normal relationship outside of recessions with lower rates just meaning higher prices and unfortunately worsen the affordability problem.'
REA group senior economist Eleanor Creagh agreed, saying house prices won't run as hard as previous cycles.
'Market momentum is building amid renewed buyer confidence and improved sentiment, buoyed by falling interest rates and expectations of another rate cut in July,' she said.
'However, the upturn remains measured as affordability constraints keep the pace of growth in check.'
The Reserve Bank of Australia has cut interest rates twice since inflation was contained – in February and May – and is widely forecast to slash the official cash rate on Tuesday following its July board meeting.
After a short-lived price reprieve in late 2024, home prices are at peak levels across the country, with Melbourne and Hobart being the exception.
Dr Oliver said every 0.25 per cent cut in rates by the central bank adds around $9000 that the average Aussie can borrow.
This would theoretically add $27,000 to first-home buyers' borrowing capacity.
'It's a rough guide but it depends on whether people borrow the full amount and how many buyers there are to sellers,' he said.
'But if every borrower has an extra nine grand following every rate cut then it could mean house prices go up by the same amount, it could mean house prices go up by the same amount and is why over time the benefit to home buyers of lower interest rates tends to be lost to higher house prices.'
Dr Oliver said rate cuts would likely make things worse for first home buyers if the RBA continues to cut interest rates.
'If we had a more normal property market and the supply of new homes was in line with the growth of the population then lower interest rates at times could help first home time buyers,' he said.
'But in the current environment, when there is an imbalance between demand and supply, it just makes the situation worse.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Australian
2 hours ago
- The Australian
Anthony Albanese revamps ‘Come and say G'day' campaign in bold pitch to China
An iconic Aussie campaign urging tourists to 'Come and say G'day' is being revamped as Anthony Albanese spruiks the country's postcard-perfect tourism offerings to prospective tourists in Shanghai. The Prime Minister landed in China's biggest city on Saturday, kicking off an unusually lengthy state visit at the invite of counterpart Li Qiang. Mr Albanese hopes to convince the Chinese that Australia has more to offer than the world's best tariff-free beef and lobster, amid the spectre of an increasingly militaristic regional rivalry looming large over the Australia-China relationship. But Mr Albanese appears otherwise keen to focus on other areas, such as the billions of dollars vacationing Chinese pump into Australia's thirsty tourism sector. Mr Albanese has touched down in China, where he is hoping to appeal to holidaymakers to visit Australia with a revamped tourism campaign. Picture: NewsWire / Nikki Short A 'Memorandum of Understanding' between and Tourism Australia will come with a revamp of the iconic 'Come and Say G'day' campaign. Picture: Supplied He is expected to sign a deal with Chinese travel giant to promote Australia as the place to see. The 'Memorandum of Understanding' between and Tourism Australia - our peak government agency promoting Australian travel destinations - will come with a revamp of the 'Come and Say G'day' ad campaign. Like the original campaign in 2022, it will star Rosy the Kangaroo welcoming Chinese tourists to Australia. It will also feature Yu Shi, a young A-list actor leading an explosive career since his 2023 break-out role in a major Chinese epic fantasy franchise. 'Not only is Australia's beef, barley, red wine and lobster the best in the world – we're the best place in the world to come for a holiday,' Mr Albanese said. Tourism Australia's $125m campaign starring Ruby the Roo and Louie the Unicorn was launched in 2023 in a bid to boost the country's starved tourism industry. Picture: Supplied 'Expanding our tourism relationship with China will mean more jobs for Australians and a boost to Australian businesses.' Chinese holidaymakers are Australia's highest-paying visitors. Making up some 860,000 visits, tourists from mainland China splashed a whopping $9.2bn in the 12 months to March, according to official figures. Both the number of visits and the amount spent were up on March 2024 figures by 26 per cent and 28 per cent respectively. Still reeling from the Covid-19 pandemic and blindsided by devastating natural disasters in recent years, it is a welcome trend for Australia's tourism industry.
News.com.au
3 hours ago
- News.com.au
‘Come and say G'day': Anthony Albanese revamps iconic Aussie tourism campaign in pitch to Chinese holidaymakers
An iconic Aussie campaign urging tourists to 'Come and say G'day' is being revamped as Anthony Albanese spruiks the country's postcard-perfect tourism offerings to prospective tourists in Shanghai. The Prime Minister landed in China's biggest city on Saturday, kicking off an unusually lengthy state visit at the invite of counterpart Li Qiang. Mr Albanese hopes to convince the Chinese that Australia has more to offer than the world's best tariff-free beef and lobster, amid the spectre of an increasingly militaristic regional rivalry looming large over the Australia-China relationship. But Mr Albanese appears otherwise keen to focus on other areas, such as the billions of dollars vacationing Chinese pump into Australia's thirsty tourism sector. He is expected to sign a deal with Chinese travel giant to promote Australia as the place to see. The 'Memorandum of Understanding' between and Tourism Australia - our peak government agency promoting Australian travel destinations - will come with a revamp of the 'Come and Say G'day' ad campaign. Like the original campaign in 2022, it will star Rosy the Kangaroo welcoming Chinese tourists to Australia. It will also feature Yu Shi, a young A-list actor leading an explosive career since his 2023 break-out role in a major Chinese epic fantasy franchise. 'Not only is Australia's beef, barley, red wine and lobster the best in the world – we're the best place in the world to come for a holiday,' Mr Albanese said. 'Expanding our tourism relationship with China will mean more jobs for Australians and a boost to Australian businesses.' Chinese holidaymakers are Australia's highest-paying visitors. Making up some 860,000 visits, tourists from mainland China splashed a whopping $9.2bn in the 12 months to March, according to official figures. Both the number of visits and the amount spent were up on March 2024 figures by 26 per cent and 28 per cent respectively. Still reeling from the Covid-19 pandemic and blindsided by devastating natural disasters in recent years, it is a welcome trend for Australia's tourism industry.
SBS Australia
6 hours ago
- SBS Australia
Australia's hermit crabs are in demand globally but some want the trade banned
A push to export hermit crabs from Western Australia has sparked criticism, with one political party calling to ban the trade over concerns about animal welfare and environmental impact. Merv Cooper runs Crazy Crabs in Western Australia — a business operating since 1979, specialising in the sale of Australian land hermit crabs. He sells these to Australian pet stories, and also exports them internationally to locations including Hong Kong and the United States. But his export permit expired late last year and the federal Department of Climate Change, Energy, the Environment and Water (DCCEEW) is now assessing a three-year extension — a move the Animal Justice Party says would be "reckless and short-sighted". SBS News attempted to contact Cooper for comment but he was unavailable. Experts say it's difficult to know whether harvesting the crustaceans is sustainable, due to regulatory gaps in Australia's hermit crab trade. A little-known industry The species — Coenobita variabilis — is endemic to Australia, found only along the north-western coast of Western Australia and in parts of the Northern Territory. In its proposal to the DCCEEW, Crazy Crabs said the business collects on average 30,000 crabs each. In summer, he and a small crew head out for four to six days at a time, collecting crabs at night on foot using torches and buckets. "Really small" crabs are left on the beach. It says collections happen "only a couple of times a year" and these don't "appear to have any detriment on populations". But reliable data on hermit crab harvesting is scarce. During a typical year, Merv Cooper collects 30,000 crabs from Western Australian beaches — which he sends off to pet shops across Australia. Source: Getty / Jamie La Australian states and territories are responsible for domestic trade, including licensing requirements. This makes it difficult to determine the exact number of active hermit crab export operators in Australia, the quantity of crabs they collect, and the potential impact of this activity. According to an ABC report in 2022, WA Fisheries data indicated around 80,000 land hermit crabs were collected by two active operators that year. At the time, they estimated the commercial value of a hermit crab licence to be between $1 million and $5 million. A DCCEEW spokesperson said the federal government "strictly regulates commercial trade in wildlife and wildlife products from Australian native species, such as hermit crabs. Animal Justice Party MPs say the application highlights a lack of scientific rigour in how such trades are assessed — and could open the door to further exploitation. "This proposal is a stark example of the federal government's failure to uphold rigorous scientific and environmental standards," said Victorian upper house MP Georgie Purcell, "Allowing the commercial export of a native species without comprehensive ecological assessments is reckless and short-sighted." WA upper house MP Amanda Dorn said she is concerned that if the trade is allowed to continue with little regulation, "fragile ecosystems" could be "irreversibly" damaged. In its proposal, Crazy Crabs said WA's Department of Primary Industries and Regional Development does not consider Coenobita variabilis to be in need of formal management plans for protection. It said the number of crabs and the locations where they were collected are reported monthly, as required by state licensing laws. "I have been collecting Hermit crabs for over 50 years and have never seen any need for restrictions," the proposal reads." I don't go to all places every year, hence there is always plenty of hermit crabs." Tim Nichols, a manager at WA Fisheries, told the ABC in 2022 the species was abundant and their population was unlikely to be affected by the current level of fishing. 'Relying on self-reporting': Expert raises concerns Kim Feddema, a wildlife trade expert and lecturer at Edith Cowan University, said the trade relies heavily on licence-holders to assess their own environmental impact, with no baseline population data or independent monitoring. "We need to understand how many hermit crabs are actually in those locations and what role they play in the broader ecology," she told SBS News. "Without baseline data, there's no way to judge the sustainability of this kind of trade." While the international export of native species is subject to federal regulation, hermit crabs are not formally listed as protected. Invertebrates often fall through regulatory gaps, Feddema said, because they're harder to monitor and traditionally not perceived as sentient. Kim Feddema, a wildlife trade expert, said more regulation is necessary in the industry to ensure the welfare of hermit crabs and to understand the environmental implications of their removal. Credit: Stephen Heath / Edith Cowan University Globally, land hermit crabs are harvested for both the pet and shell trade. While shells are often sold as decorations, Feddema notes they once housed live animals. "People often perceive [shells] to be empty, but there is a live animal within them before that stage," she said. Across Asia, including Thailand and Japan, this dual trade has already been linked to population declines. While Australia requires permits to collect hermit crabs at a commercial level, enforcement is limited and operators are not independently monitored. "We're relying on self-reporting here," Feddema said. "There's no verification of what's being collected or the long-term impact on local populations." Are hermit crabs suitable pets? Hermit crabs play a vital role in their native ecosystems, Feddema said, acting as "ecosystem engineers". They recycle shells that would otherwise be buried by sand, creating homes for algae, sponges, and other small organisms. They also help with nutrient recycling by scavenging on waste and decaying animals. But despite this ecological importance, hermit crabs are often marketed as low-maintenance pets — sold in pet stores and online — a characterisation Feddema said is misleading. She said in the wild, they can live for over thirty years. In captivity, however, their lifespans are often significantly shortened — sometimes surviving only a few months or years. She compared the industry to the "cut flower trade", where high mortality rates are treated as inevitable. "People sometimes treat pets the same way they treat cut flowers — that they'll have them for a short period of time and then accept a certain level of mortality," she said. In its proposal, Crazy Crabs said its experience in taking, holding and transporting hermit crabs "has reduced the mortality rate during transit to practical zero for the last ten years". Demand for rare and large individuals is also growing, raising concerns about overharvesting ecologically important crabs that produce a high number of offspring. Studies have shown hermit crabs exhibit signs of sentience, including problem solving, memory and a response to pain — which Feddema said challenges assumptions that invertebrates do not require additional welfare standards. "There is a question about how appropriate they are to be held in captivity," she said. "If the owner doesn't have the particular needs and they're not able to recognise the complexity of owning a hermit crab." She said reforms are urgently needed to assess population health and establish long-term data. "It is very possible that this is a trade that is sustainable, but we just can't make that decision without the data behind it."
