Latest news with #LucindaJerogin
ABC News
10-08-2025
- Business
- ABC News
If the RBA cuts rates this week, expect property prices to rise (again)
The RBA Board is meeting this week (on Monday and Tuesday) to discuss interest rates. It surprised markets last month by keeping rates on hold, but analysts think we will see a rate cut this week. Rate cuts feed into higher house prices, so what should we expect? The Commonwealth Bank's chief economist, Luke Yeaman (a former deputy secretary of the Commonwealth Treasury), and associate economist Lucinda Jerogin, updated their forecasts recently. The CBA is Australia's largest home lender, so it has a clear interest in having accurate house price forecasts. They said by the end of this year, home price rises would be higher than they were previously thinking, but next year prices will probably rise by less than they were previously thinking. "We now expect growth of 6 per cent in 2025 (previously 4 per cent) and 4 per cent in 2026 (previously 5 per cent)," they wrote. "The upward revision this year reflects current market momentum, a still sound labour market and strong real household disposable incomes. "However, given our forecast for a relatively shallow interest rate cycle, easing population growth and continued headwinds in the construction sector, this home price upswing is still expected to be relatively modest and taper out in 2026." Their forecast is conditional on the RBA cutting rates by 25 basis points this week, and by another 25bp in November. If the RBA cuts rates again after that, in early 2026, it could see a stronger rise in property prices than they're forecasting. They say Australia's housing affordability woes are far from over, in this situation. "There is little cause for celebration," they say. Yeaman and Jerogin say interest rates are the dominant driver of property prices in the short run (when the supply of housing is fixed). They say their statistical models suggest 100 basis points of interest rate cuts could see home prices (as measured by the Cotality National Hedonic Home Value Index) rise by 9 per cent. The RBA has already cut rates by 50bp this year (in February and May combined), and a rate cut this week (25bp), followed by another rate cut in November (25bp), would bring the total to 100bp. However, they say if the RBA cuts rates again in early 2026, by another 25bp, that would lift the expected interest rate impact on home prices from 9 per cent to 11.5 per cent. They say the expected increase in property prices will not be good for housing affordability. That figure of 6 per cent annual price growth is also a national figure. Dwelling prices are forecast to grow at very different rates across Australia's major cities in 2025. They're forecasting annual growth of 13 per cent for Darwin, 8 per cent for Brisbane, 7 per cent for Perth, and 6 per cent for Adelaide and Canberra. But next year, those rates of growth are forecast to be much lower (at this stage). Yeaman and Jerogin say the long-run drivers of interest rates appear to be stabilising. They say real household disposable income is recovering strongly back towards trend levels. Population growth is expected to continue easing through 2025 and 2026, which will take pressure off housing demand and prices. They expect a modest pick-up in new construction activity. (As interest rates come down, you typically see a lift in building approvals, feeding into higher completions.) They say "household size" has also increased again, after collapsing during the pandemic, as cost-of-living pressures, falling housing affordability and higher rents have led to more people living together under the same roof (which helps to reduce demand for housing). "The combination of lower population growth and rising construction activity should see the flow of housing supply and demand move closer to balance by the end of 2026," they say. "Estimates from the National Housing Supply and Affordability Council suggest underlying housing demand will exceed underlying supply over 2025 and 2026, but the gap is closing. "This should take some pressure off house prices," they say. However, they say housing affordability will remain a "significant challenge" for home buyers, especially first home buyers. They say over the long term, home price growth should broadly match growth in household incomes. But in contemporary Australia, home price growth has consistently exceeded income growth. Since 1990, real home prices have grown by 3.3 per cent a year, while real household disposable income has only grown by 2.9 per cent. That makes a big difference over 35 years. Over that period, they say a structural shift towards lower interest rates and easier access to credit have allowed price-to-income ratios to rise. Strong population growth, coupled with relatively unresponsive supply, has also contributed to higher property prices. "This has made Australia's housing market one of the least affordable in the world," they say. "The ratio of real median house prices to real household disposable income is 7.9, according to Cotality. "And Sydney and Melbourne rank among the least affordable global cities. They say, according to the National Housing Supply and Affordability Council, affordability deteriorated in 2024, with 50 per cent of median household income needed to meet repayments for the average mortgage. Housing debt servicing costs as a percentage of disposable income also surged to record levels last year. "The rate of decline in affordability has slowed since 2023, as real household disposable incomes picked up and financing costs have eased," they say. "While this trend is expected to continue in coming years, there is little cause for celebration. "Our calculation of housing affordability, based on the percentage of pre-tax income directed towards the mortgage for a dual average full-time income household buying a median priced dwelling, suggests unaffordability peaked … in November 2024. "Affordability is estimated to improve over the next two years, even as dwelling prices rise. "Notwithstanding, housing affordability will remain stretched in a historical sense, particularly relative to pandemic lows."
Business Recorder
01-08-2025
- Business
- Business Recorder
Australia, NZ dollars badly bruised as greenback makes a comeback
SYDNEY: The Australian and New Zealand dollars were looking punch-drunk on Friday as six straight sessions of losses left them at multi-week lows on a resurgent greenback, though they held up better on other currencies. The Aussie was pinned at $0.6429, and near a five-week low of $0.6422. That left it down almost 2% on the week, the steepest fall since late March. Support lies at $0.6373, with resistance at $0.6476. The kiwi dollar was stuck at a 10-week trough of $0.5874 , having shed 2.3% for the week. Support lies at $0.5847, with resistance at $0.6932 and $0.5969. The losses were almost all against the U.S. dollar, with the Aussie steady on the yen and up on the euro for the week. That partly reflected markets scaling back the probability of a Federal Reserve rate cut in September to around 40%, from 75% a couple of weeks ago. At the same time, a soft inflation report has markets ever more convinced the Reserve Bank of Australia will cut the 3.85% cash rate by 25 basis points when it meets on August 12, and continue easing to 3.10% by early next year. 'The risks appear to be skewed to the downside for inflation and this gives the RBA the green light to cut in August,' said Lucinda Jerogin, an economist at CBA, though she doubts it will move in September as well. 'There is a clear preference to wait for quarterly CPI prints, especially as we approach neutral,' she added. 'We favour November as the next most likely outcome for a cut and it would take a considerable weakening in the economic data to consider the September meeting 'live'.' Investors are also wagering the Reserve Bank of New Zealand will cut its 3.25% cash rate by a quarter point at the next meeting on August 20, though that could be the end of the cycle. It has already slashed rates by 225 basis points and it is very close to estimates of neutral, though some analysts argue policy should be flat-out stimulatory given the weakness of the economy. Key will be quarterly data on the labour market due next week where analysts predict the unemployment rate will rise to its highest in eight years at 5.3%, while wage growth is expected to slow to the lowest in four years at 2.3%.
Daily Mail
23-06-2025
- Business
- Daily Mail
Proof that high overseas immigration DOESN'T make your city richer
High immigration levels are failing to make Australians richer - at least judging by the cities foreigners are moving to in droves. A 2023 study by the Centre for Population partnered with the OECD found that Australian-born workers benefitted from boosted labour productivity, wages and employment rates in regions that had high migration. According to the report, on average a region with 10 per cent larger migrant share had a 1.3 per cent larger regional wage difference, while a 1 per cent rise in annual migrant inflow, lead to a 0.53 per cent increase in employment for all genders and ages. Sydney and Melbourne last year accommodated 61 per cent of the 340,800 new migrants who relocated to Australia. But instead of boosting prosperity in Australia's two biggest cities, rapid population growth from those who have relocated from overseas appears to only be causing a big exodus to other states - limiting economic activity. Victoria last year housed 100,503 new overseas migrants or 29.4 per cent of the new permanent and long-term arrivals into Australia. Australia's most populous state, covering Melbourne, is home to 26 per cent of the nation's 27.4million people but only comprises 22 per cent of the national gross domestic product. Commonwealth Bank associate economist Lucinda Jerogin noted Victoria's economic growth pace has lagged as 3,203 residents left for another part of Australia last year. She said in Victoria, the 'net number of interstate migration' or the amount of people moving from within Australia to the state, 'has been around zero for the last few quarters'. 'This is well below the pre-Covid trend where Victoria was a popular destination for internal migrants.' 'Victoria's economy is also weak. The unemployment rate is the highest of any state or territory,' she said. Victoria's unemployment rate of 4.4 per cent is well above the national average of 4.1 per cent. The state's continuing exodus to other states and a weak economy also kept a lid on house prices with values falling by one per cent in the year to May. They continued soaring in Brisbane and Perth - two cities receiving a big influx of interstate migration. NSW is home to 31 per cent of Australia's population but makes up 30 per cent of national GDP. Last year it received 106,730 foreign migrants, and 28,113 people left for another part of Australia. 'Growth in the country's largest state economy is sluggish,' Ms Jerogin said. By contrast, WA has Australia's strongest population growth pace of 2.4 per cent, based on attracting 12,612 new interstate migrants last year on top of the 45,124 overseas migrants moving in. The mining-rich state makes up 11 per cent of Australia's population but makes up 17 per cent of the national economy, thanks to lucrative revenue streams from exporting iron ore to China. WA is also resilient to Donald Trump's tariffs, with exports of gold to the United States soaring by 31.6 per cent during the first three months of 2025. 'WA exports have fallen off its peak, however, US destined exports have skyrocketed,' Ms Jerogin said. Queensland houses 20.5 per cent of Australia's population and makes up 20 per cent of the national economy. But some provincial states are contributing less to the economy. SA makes up 7 per cent of Australia's population but only 5 per cent of GDP. It also saw 1,582 residents leave for another part of Australia. 'The smaller states and territories are all also seeing negative interstate migration, a return to more normal trends that were present pre-Covid,' Ms Jerogin said.
The Australian
23-06-2025
- Business
- The Australian
Aussies exit NSW, WA hits 3 million population milestone
More people are fleeing NSW than any other state in Australia. Population data released by the Australian Bureau of Statistics this week shows 28,118 people left NSW in 2024. Western Australia tipped over three million people for the first time as the resource-rich state recorded the highest nationwide growth rate. At the end of 2024, 27.4 million people called Australia home, an increase of 445,900 on the previous year and representative of a 1.7 per cent increase. Commonwealth Bank economist Lucinda Jerogin said population growth had slowed quicker than anticipated on the back of the post-pandemic peak. This sea of blue is not streaming into the State of Origin, instead they are headed for a Melbourne versus Collingwood AFL match. Picture: David Crosling / NewsWire 'A slowdown in natural increase continues to place a drag on Australia's population growth,' she said 'Cost-of-living pressures, rising female workforce participation and broader uncertainty are likely driving this downward trend. 'Growth in deaths are outpacing births leading to the decline in natural increase.' The data shows NSW lost more than 28,000 people to net interstate migration, with 112,763 people leaving for elsewhere in the country. Queensland picked up more than 106,000 people from other states for a result of nearly 26,000 fresh faces. Nearly 40,000 Aussies moved to WA for a net increase of about 12,500 people. Australians continue to leave NSW, destined mostly for Queensland but also WA. Picture: NewsWire / Dan Peled While Queensland and Victoria's total populations grew by 1.9 per cent, WA's grew 2.4 per cent. The population of every state and territory grew by at least 1.1 per cent, except Tasmania, which recorded a 0.3 per cent increase. 'Within Australia, people are continuing to leave NSW, and to a lesser extent Victoria and the smallest jurisdictions, and head into Queensland and WA,' Housing Industry Association economist Tom Devitt said. 'But even the jurisdictions losing residents interstate are absorbing enough overseas arrivals to see their populations expand.' State governments needed to do more to stimulate housing construction, he said. 'Foreign capital is highly liquid. State governments have forced institutional investors into building apartments in other countries,' Mr Devitt said. 'As a consequence, multi-unit construction volumes in Australia have halved, likely costing state governments tax revenue.' Blair Jackson Reporter Blair's journalism career has taken him from Perth, to New Zealand, Queensland and now Melbourne. Blair Jackson
Perth Now
20-06-2025
- Business
- Perth Now
State Aussies are leaving in droves
More people are fleeing NSW than any other state in Australia. Population data released by the Australian Bureau of Statistics this week shows 28,118 people left NSW in 2024. Western Australia tipped over three million people for the first time as the resource-rich state recorded the highest nationwide growth rate. At the end of 2024, 27.4 million people called Australia home, an increase of 445,900 on the previous year and representative of a 1.7 per cent increase. Commonwealth Bank economist Lucinda Jerogin said population growth had slowed quicker than anticipated on the back of the post-pandemic peak. This sea of blue is not streaming into the State of Origin, instead they are headed for a Melbourne versus Collingwood AFL match. David Crosling / NewsWire Credit: News Corp Australia 'A slowdown in natural increase continues to place a drag on Australia's population growth,' she said 'Cost-of-living pressures, rising female workforce participation and broader uncertainty are likely driving this downward trend. 'Growth in deaths are outpacing births leading to the decline in natural increase.' The data shows NSW lost more than 28,000 people to net interstate migration, with 112,763 people leaving for elsewhere in the country. Queensland picked up more than 106,000 people from other states for a result of nearly 26,000 fresh faces. Nearly 40,000 Aussies moved to WA for a net increase of about 12,500 people. Australians continue to leave NSW, destined mostly for Queensland but also WA. NewsWire / Dan Peled Credit: News Corp Australia While Queensland and Victoria's total populations grew by 1.9 per cent, WA's grew 2.4 per cent. The population of every state and territory grew by at least 1.1 per cent, except Tasmania, which recorded a 0.3 per cent increase. 'Within Australia, people are continuing to leave NSW, and to a lesser extent Victoria and the smallest jurisdictions, and head into Queensland and WA,' Housing Industry Association economist Tom Devitt said. 'But even the jurisdictions losing residents interstate are absorbing enough overseas arrivals to see their populations expand.' State governments needed to do more to stimulate housing construction, he said. 'Foreign capital is highly liquid. State governments have forced institutional investors into building apartments in other countries,' Mr Devitt said. 'As a consequence, multi-unit construction volumes in Australia have halved, likely costing state governments tax revenue.'
