Latest news with #Reserve Bank
News.com.au
a day ago
- Business
- News.com.au
Revealed: Australia's surprising new mortgage hotspots in 2025
Extraordinary new data from one of the nation's biggest lenders has revealed the surprise suburbs that are now Australia's top mortgage hotspots. Big Four bank executive Denton Pugh, who is the National Australia Bank executive for home lending, shares NAB's proprietary home lending data – unveiling trends between January–May 2025 – and what their expectations are now interest rates. By Denton Pugh, NAB Executive for Home Lending You'd be forgiven for feeling a little deflated after the Reserve Bank left rates on hold earlier this month. The market, and most economists, were expecting a cut. In RBA meeting minutes recently released the decision to keep rates steady was about timing rather than direction, with Governor Michele Bullock noting that, 'we are on a path to easing further'. Many house hunters would have been hoping for a midwinter cut, but despite this disappointment, we're seeing momentum continue through the winter months, which are traditionally a little quieter. Twelve months ago, many buyers were holding back due to higher rates. Fast-forward to today: two rate cuts behind us, and NAB expecting another two this year, many home buyers, especially first-home buyers, see this as a window of opportunity before the market heats up further. We're not seeing a buying frenzy, but things are definitely busier this year. In fact, the average number of bidders at auctions nationwide has reached its highest level in 18 months. Momentum is building well ahead of the traditional spring peak. Government support is also playing a key role. The Home Guarantee Scheme continues to help thousands of Australians get into their first home with lower deposits – the scheme is expected to be expanded in 2026. And in recent months, both Queensland and Western Australia have made changes to their assistance offered. In Queensland, eligible first-home buyers purchasing or building a new home no longer pay stamp duty, regardless of the property price. The state's 2025 budget also announced a 'Boost to Buy' shared equity scheme to help buyers with lower deposits into the market. WA has made changes to its stamp duty concessions too, significantly reducing the upfront costs for first-home buyers. I'm always hearing stories where after talking to a home lending expert, a customer realises they can break into the property market sooner than expected. If you're in that camp, thinking about buying but not sure where to start, it's worth having that conversation. Where are Australians buying? Looking at NAB home lending data from metro suburbs specifically, Truganina in Melbourne's west is the most popular metro suburb for home buyers so far in 2025. Five of the top 10 spots also go to the city's outer ring. Top 10 metro suburbs* 1. Truganina, Melbourne 2. Roxburgh Park, Melbourne 3. Yarramundi – Londonderry, Sydney 4. Point Cook, Melbourne 5. Cranbourne East, Melbourne 6. Tarneit, Melbourne 7. Schofields, Sydney 8. Wentworthville, Sydney 9. Piara Waters – Forrestdale, Perth 10. Prestons, Sydney Affordability is the obvious driver, especially for first-home buyers. Many are looking further out where their money buys more, and they don't have to compromise on space and lifestyle. Many of these suburbs are now better connected thanks to major infrastructure investments, with just a short commute to the CBD. *NAB proprietary home lending data between January – May 2025 – Denton Pugh is National Australia Bank's Executive for Home Lending.
ABC News
6 days ago
- Business
- ABC News
International students have not driven rents and inflation higher, RBA says
The rapid growth in international student numbers post-pandemic has not been a major driver of higher rents and inflation, the Reserve Bank says. The RBA's latest quarterly Bulletin was published on Thursday, with a special section on International Students and the Australian Economy. It looks at the big shifts in foreign student numbers in recent years. The analysis covers the period when the students left Australia en masse during 2020 and 2021, and then returned after borders reopened in late 2021. "Rapid growth in the international student stock post-pandemic likely contributed to some of the upward pressure on inflation from 2022 to early 2023, especially as arriving students front-loaded their spending as they set up in Australia and took time to join the labour market," the RBA article says. "The rise in international student numbers is likely to have accounted for only a small share of the rise in rents since the onset of the pandemic, with much of the rise in advertised rents occurring before borders were reopened." The RBA's analysis considers how foreign student numbers have affected consumption, inflation, the labour market, and the housing market in recent years, only from a short-run perspective. "Longer run effects are outside the scope of the work," the article notes. The RBA says education exports are now Australia's fourth largest category of export, worth approximately $50 billion in 2023-24. It says in recent years, international students have been an "important driver" of net overseas migration and gross domestic product (GDP) growth. But it says international students impact Australia's economy in numerous ways, and the dynamics have been unusual in the post-pandemic period. Firstly, it says global demand for education in Australia had grown solidly in the decade prior to the pandemic. It says that reflected a range of factors, including rising household disposable income in Asia, the active promotion of Australia as an education destination, and changes to migration policies that enabled higher education students to work in Australia after their studies. Other factors included global population growth, and the depreciation of the Australian dollar after the mining boom. But it says with the introduction of border restrictions in March 2020 to contain the spread of the COVID-19 virus, new students were unable to enter Australia. And as a result, the number of international students fell sharply. Then, after Australia's international borders reopened in late 2021, the number of international students onshore rose rapidly. You can see that in the graph above. But while student arrivals quickly returned to around pre-pandemic levels after borders reopened, the number of students departing Australia were lower than normal because there were fewer students living in Australia to begin with (thanks to the huge number of students that departed Australia during the COVID lockdowns). The RBA says that unusual dynamic contributed to the total stock of international students living in Australia rising sharply from just under 300,000 in 2022 to 560,000 by the end of 2023. "Accordingly, international students were an important driver of net overseas migration during that period, accounting for around half of Australia's total net overseas migration," the RBA says. The RBA says an important area in which international students contribute to demand is in the housing market. It says foreign students are more likely to rent than Australian residents. It says about 50 per cent of over 70,000 international students surveyed in the 2023 Student Experience Survey reported that they rent in the private rental market (either in a private rented house, flat or room), whereas about one-third of the rest of Australia's population are renters. It says in the Student Experience Survey, about 24 per cent of international students reported living with family or friends, 15 per cent in student accommodation, 3 per cent in a homestay, and 2 per cent in "other" accommodation. It finds housing demand from international students also tends to be geographically concentrated around areas where educational institutions are based, notably inner-city locations. The RBA says that in theory, when it comes to property prices and rents, in the face of a relatively fixed supply of housing in the short term, we would expect an increase in international students to put upward pressure on rental demand and rents (all else equal), in the same way that any kind of increase in the renting population would impact demand. But it doesn't think they had a huge impact on rents in Australia in recent years. "As a back-of-the-envelope exercise, if we assume that 50 per cent of international students rent, an additional 100,000 students would increase private rental demand by 50,000 individuals," it says. "Models of the housing market used by the RBA suggest that a 50,000 increase in population would raise private rents by around 0.5 per cent compared with a baseline projection. "The marginal effect of an additional renter may be greater in periods where the rental market is tight and vacancy rates are low, such as occurred post-pandemic. "Nonetheless, the rise in international student numbers is likely to have accounted for only a small share of the rise in rents since the onset of the pandemic, with much of the rise in advertised rents occurring before borders were reopened," it argues. The RBA says that with time, higher demand for housing due to a greater number of international students in Australia could spur more dwelling investment, in the way it would for an expansion of the population more broadly. "One area where higher international student numbers have generated a supply response has been in purpose-built student accommodation, with rapid growth in building approvals for such projects in recent years. "Industry projections are for continued rapid growth in this area in the years ahead," it says. The RBA says international students also make an important contribution to the labour market. "While they only made up around 2 to 3 per cent of the labour force prior to the pandemic, they constitute the second largest group of temporary visa holders with work rights in Australia after New Zealand citizens, making them a large source of potential labour supply for the Australian economy," it says. It says in the post-pandemic years, the contribution of international students to labour supply has risen, reflecting both a rise in their participation rates and a lift in the limit on how many hours they can work (from 40 hours to 48 hours per fortnight). But it says that dynamic may drop again, given recent government changes. "Looking forward, while rules around the number of hours that international students can work are higher than pre-pandemic, average participation may decline from the levels seen in 2024," the RBA says. "This is because the recent tightening in visa policy has targeted groups of students who were more likely to be seeking to work; that is, those international students who do receive visas going forward are less likely to be focused on employment opportunities in Australia on average." The RBA says another unique feature of international students relates to the savings they bring with them to set up and finance their life in Australia. It says currently, international students have to provide proof of nearly $30,000 of savings to receive a student visa, up from about $25,000 in 2023, which is higher than the cash savings most Australian residents have in their bank accounts. "This could mean there is a temporal dimension in international student consumption, whereby consumption is strong upon arrival in Australia as individuals use these savings to set up their lives (i.e. purchasing furniture and other goods) but then slows afterwards," the RBA says. "In periods of strong inflows of students, such as just after borders reopened after the pandemic, this likely had an important effect on aggregate demand in the economy," it says. But it says a large proportion of student spending is on tuition fees, which account for 40 per cent of international student spending. "Our estimates of the average weekly spend of international students using Balance of Payments data suggest that international students spend twice as much as residents," the RBA says. [But] excluding fees, international students spend roughly the same as residents on average. "There are, however, some slight sectoral differences. Accommodation and food, transport, and housing make up a slightly higher share of the gross value added associated with education export spending, while business services, and retail and wholesale trade, make up a lower share," it says. And overall, the RBA says the rapid growth in the number of international students post-pandemic likely contributed to some of the upward pressure on inflation from 2022 to early 2023, but it wasn't a major driver. "The increase in international students was just one of many other forces at play in this time that drove demand above supply in the economy, and hence higher inflation," the RBA concluded.
Bloomberg
6 days ago
- Business
- Bloomberg
RBNZ Says Ready to Cut Rates Further If Price Outlook Eases
By Updated on Save New Zealand's central bank is ready to cut interest rates further if the outlook for price pressures continues to soften as expected, chief economist Paul Conway said, warning that US tariffs are likely to damp economic growth and inflation. While the Reserve Bank held the Official Cash Rate at 3.25% at its last meeting on July 9, 'we see scope to lower it further if medium-term inflation pressures keep evolving as we anticipate,' Conway said in a speech Thursday in Wellington. 'We are watching closely, we are constantly updating our analysis and we are ready to adjust the Official Cash Rate as needed.'
The Guardian
6 days ago
- Business
- The Guardian
House prices rise in every Australian capital city together for first time in four years
Australia's eight state and territory capital cities posted simultaneous house price rises for the first time in four years last quarter as interest rate cuts underpinned a wave of buying. After a brief reprieve in 2024, prices accelerated in Sydney and Melbourne while Australia's smaller capitals retained momentum, according to June quarter data from property portal Domain. 'It doesn't matter the capital city, it doesn't matter the property type, prices are rising,' Domain's chief of research and economics, Nicola Powell, said. More than 1,700 suburbs around Australia saw house values rise over the year to June, with suburban Perth seeing some of the biggest jumps. About 400 suburbs saw prices fall over the year. Prices picked up in every capital city across building types over the three months to June, the first time in four years for houses and the first time in two years for units. Broad-based demand surges saw prices rise on an annual basis for both houses and units across most capital cities, excluding houses in Darwin, units in Melbourne and both types in Canberra. Sign up: AU Breaking News email Demand jumped nationwide after the Reserve Bank's two cuts to interest rates in 2025 increased borrowing capacity, which Cotality data indicated had pushed more bidders to auctions and driven clearance rates close to 70%. Clearance rates refer to the percentage of properties sold at auction, compared with the total number of properties listed to go under the hammer. Prospective buyers shared stories with Guardian Australia of trying to purchase a house during a fast-rising market, with many repeatedly outbid. While prices are still rising, buying momentum has eased in some overheated capitals, including Brisbane and Adelaide, after median prices surpassed $1m. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion 'That just locks out so many people from purchasing a house, and it does shift demand towards units … because of the landscape of affordability,' Powell said. 'Some buyers have to seek more affordable alternatives, and units obviously present that.' While Brisbane houses saw prices rise 7.5% in the year to June, apartment prices rose 13.3%. The three months to June saw apartment price growth outstrip house price hikes in Melbourne, Brisbane, Adelaide, Canberra and Darwin. Apartment prices were starting to catch up to the pace of house prices as homebuyers and investors switched their focus towards relatively cheaper units, according to Chyi Lin Lee, professor of property at the University of New South Wales. 'What we've seen here is houses leading the units, so we can see the unit prices actually catching up,' Lee said. He said interest in apartments had likely also risen as buyers looked to escape renting and investors seek to take advantage of the persistent surge in rental costs. Cotality data released on Thursday indicated rents had leapt more than 40% since 2020, with median asking prices up nearly $200 per week, or more than $10,000 annually. Rent hikes have since slowed to just 3.4% annually in the year to June, the weakest 12-month increase since 2021 and the equivalent of a $22 weekly increase on the median rent, Cotality found. Property prices, though, are expected to continue to accelerate as the Reserve Bank cuts interest rates further, with a third cut expected when the RBA board meets in August. Analysts have not forecast a property price boom given so many Australians have already been priced out of the market, with AMP predicting home prices will rise no more than 6% annually.
ABC News
22-07-2025
- Business
- ABC News
RBA meeting minutes reveal plan for 'cautious and gradual' rate cuts clashed with unemployment 'surge'
They say hindsight is 20-20, but three members of the Reserve Bank board are likely to turn up at the next meeting with the strong temptation to say, "we told you so". The RBA has released the minutes from its meeting two weeks ago, when interest rates were left on hold, catching the market and most private-sector economists off guard. That decision to keep rates steady was made by a six to three majority, with the minority arguing there was no need to wait. "The case to lower the cash rate target at this meeting rested on a view that there was already sufficient evidence to be confident that inflation was on track to be sustainably back at the midpoint of the target range, if not lower," the minutes revealed. The minority in favour of a cut argued that US tariff policy would be a drag on future global economic growth, that Australia's economic expansion remained "subdued", households were saving more, wages growth and services inflation were weakening, and that "recent data suggested a loss of momentum in activity". "Moreover, there was uncertainty around whether market sector employment growth would increase by enough to offset an expected slowing in non-market sector employment growth to maintain momentum in overall employment growth," the minutes showed. That last concern appears to have since been vindicated by another weak set of jobs numbers, released last week, showing unemployment had jumped from 4.1 per cent in May to 4.3 per cent in June, seasonally adjusted, although some analysts have attributed the scale of that increase to statistical variation. At her post-meeting press conference, RBA governor Michele Bullock said the disagreement among the board was not one of where rates should head, but merely the timing of further rate cuts. This is reflected in the formal minutes from the meeting. "All members agreed that, based on the information currently available, the outlook was for underlying inflation to decline further in year-ended terms, warranting some additional reduction in interest rates over time," the minutes noted. The majority who decided to keep interest rates on hold based their decision on a few key elements. Unlike the minority, most board members interpreted recent economic data as surprisingly upbeat, including the very monthly inflation figures that had prompted some market economists to bring forward their rate cut forecasts from August to July. "Monthly indicators of inflation had been marginally higher than were consistent with the staff's forecast for underlying inflation in the June quarter, growth in private demand in the March quarter had been a little stronger than expected and conditions in the labour market had so far not eased as anticipated," the majority argued. They also said that global economic outcomes had so far been more benign than feared at the previous May meeting, when rates had been cut, reducing the urgency for another rate cut. "Members noted that the baseline forecasts already incorporated some deterioration in global economic conditions because of higher tariffs and policy uncertainty, which was consistent with the evidence currently available on how the trade tensions and other factors might be resolved," the minutes revealed. "Moreover, the forecasts had been conditioned on a relatively modest and gradual path of further easing of monetary policy over the period ahead." After two rate cuts, the majority of the board was also concerned that it would be difficult for the RBA to know exactly when monetary policy had changed from being restrictive — that is, holding back economic growth — to neutral or boosting activity. Given the degree of uncertainty around what the current "neutral" level of the cash rate is, the majority argued that "lowering the cash rate a third time within the space of four meetings would be unlikely to be consistent with the strategy of easing monetary policy in a cautious and gradual manner". Despite the expressed caution of the majority on the RBA board, Abhijit Surya from Capital Economics expects rates to fall at next month's meeting on August 11-12, with further cuts to follow. "With the unemployment rate having surged in June and timely indicators suggesting that activity and inflation both remain subdued, the bank will almost certainly resume its easing cycle in August," he noted. "Looking further ahead, we expect the board to cut rates to 2.85 per cent by mid-2026, in line with the bank's stated goal of ensuring that monetary policy is no longer restrictive. "Our terminal rate forecast is below the 3.1 per cent currently predicted by the analyst consensus." Either way, that implies between three and four more rate cuts from the current cash rate of 3.85 per cent, unless the market has again misread the degree of caution among the majority of RBA board members.
