End of Week Property Market Update: RPData- Tim Lawless

The Australian Bureau of Statistics released Consumer Price Index (CPI) results for the December 2013 quarter earlier this week. The data showed that headline CPI (inflation) was recorded at 0.8% over the final quarter of 2013 and inflation was 2.7% over the year.

What is perhaps most interesting is that over the final six months of the year inflation was recorded at 2.0% which is outside of the Reserve Bank’s (RBA) target range when annualised. The RBA likes to look at measures of underlying inflation which remove some of the more volatile items.

Underlying inflation is measured by the trimmed mean and weighted median, both of which came in at 0.9% over the quarter and 2.6% over the year. By all measures it seems unlikely that there will be any further interest rate cuts while the inflation reading is at this level.

Looking at the components of CPI, education (5.6%), alcohol and tobacco (5.4%), health (4.4%) and housing (4.3%) recorded the largest annual increases. Clothing and footwear was the only component to record a fall (-1.3%) while growth was lower than headline inflation across the following categories: food and non-alcoholic beverages (1.1%), furnishings, household equipment and services (1.1%), insurance and financial services (1.6%), communication (1.7%), transport (1.9%) and recreation and culture (2.4%).[sam id=36 codes=’true’]

Focussing on the housing component of CPI, you can see that housing costs are rising at a faster rate than headline CPI. Over the past year, the sub-groups that have recorded the greater increases than overall housing were: water and sewerage (9.3%), property rates and charges (7.9%), utilities (6.8%), electricity (6.3%), gas and other household fuels (5.6%) and other housing (4.7%).

On the other hand, the following housing components were increasing at a slower pace than the overall CPI measure: maintenance and repair of the dwelling (2.6%), rents (3.0%) and new dwelling purchase by owner occupiers (4.1%).

Westpac and the Melbourne Institute released their monthly measure of consumer confidence earlier this week. The Consumer Sentiment Index was recorded at 103.3 points in January which was down a seasonally adjusted -1.7% over the month and the lowest reading since July 2013. Despite the fall in the index, consumer optimism continues to outweigh pessimism.

On a month-to-month basis, all components of the index fell in January and family finances over the next 12 months and time to buy major household items were the only components of the index showing higher levels of optimism than pessimism.

The index is notoriously volatile on a month-to-month basis so we like to look at a rolling six month average and on this basis sentiment was recorded at 107.2 points, its highest level since March 2011.

Weekly Advertised Listings

Over the four weeks to 19 January, there were 23,418 newly advertised properties listed for sale nationally. The number of newly advertised property listings increased by 9.2% over the week however, new listings are currently -7.7% lower than at the same time last year. Across the combined capital cities, new listings were 20.3% higher over the week although they were -7.5% lower than they were a year ago.

There are currently 224,353 properties listed for sale across the country, the lowest number of listed properties since February 2011. Total listings at a national level were -3.3% lower over the week and -5.6% lower than they were at the same time last year.

Across the combined capital cities, total listings have fallen by -3.9% over the week and they are -14.3% lower than they were at this time a year ago. Capital city listings account for just 38% of all listings nationally.

http://image.e.rpdata.com/lib/fe591570776d03757d17/m/6/2014-01-24-weekly-listings.png

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Tim Lawless

About

Tim heads up the Core Logic RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia. Visit www.corelogic.com.au


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