AUSTRALIA LEADS THE WAY

Following the RBA’s Board meeting this week it was announced as expected, that the

cash rate would remain on hold at 3.0%. This was a predictable outcome given a

number of positive data releases over recent weeks. 

In the RBA Governor’s statement he noted that, “The prospect of inflation declining over

the medium term suggests that scope remains for some further easing of monetary policy,

if needed.“No doubt the RBA took into consideration the improving conditions in

Australia’s real estate market. Released last week the RP Data-Rismark Monthly

Indices Release reported  that home values in all mainland capital cities except Perth

have recorded growth during the first four months of 2009. Darwin (5.3%), Melbourne

(4.4%) and Sydney (3.9%) lead the way in terms of value growth and nationally, property

values have risen by 2.8% during the first four months of 2009. There was a variety of

other data releases relevant to the property market this week whilst the share market

appears to have also turned a corner with the S&P/ASX 200recording its highest value

of the year during the week.

Meanwhile, the Australian dollar has rebounded strongly against the US dollar and now

sits above the 80 US cents barrier. Building Approvals data to April 2009 released by the

ABS this week showed that the most recent month saw a strong rebound in new dwelling

approvals. Comparing March 2009 to April 2009 saw an increase in building approvals of

7.5% with monthly approvals sitting at their highest level since October 2008. Data released

by Fitch Ratings this week found that mortgage arrears have fallen during the first quarter

of 2009 and this was the first time in 10 years that the first quarter of a year had

witnessed a fall compared to the final quarter of the previous year. According to their

index, delinquencies of more than 30 days decreased to 1.52% during the first quarter

of 2009, compared to a rate of 1.75% in the final three months of 2008.

Locally there is still an under supply of good homes for sale under $300,000. It is interesting

to see home prices locally also, are growing at a rate of around 2% whilst prices overseas

still falling, some by as much as 20%. It gives faith in the Australian system, and might

encourage employees seeking employment to look to local employers, because I do

believe that a lot of Aussie jobs have been lost not to local employers, but large

overseas companies employing locally. These are the reasons Australia is suffering

some of the backlash of this global recession.

 via RP Data Sourced