The release of the quarterly consumer price index data from the Australian Bureau of Statistics was the headline data release this week.
The annual change in CPI was relatively tame at 2.3% while the underlying measures of inflation which the Reserve Bank pays more attention to were right in the middle of their 2-3% target range, with the trimmed mean at 2.5% and the weighted median at 2.6%.
Overall this is a very healthy inflation read; prices are rising but not excessively. The biggest annual jumps in consumer prices were seen in alcohol & tobacco (+7.3%), Education (5.2%), Health (4.7%) and food & non-alcoholic beverages (+3.5%).
The housing ‘basket’ within the CPI measurement, which has the largest weighting, comprising 22.3% of the overall CPI measurement, saw prices rise by 2.3% over the year.
The main contributors to CPI rises from the housing group were new dwelling purchases by owner occupiers (+3.8%), rents (+2.5%) and property rates and charges (+6.3%). The rises were partially offset by a fall in electricity costs (-4.4%).
The mid-range inflation reading is good news for the economy; keeping in mind the Reserve Bank of Australia has a mandate to keep inflation between 2-3%, on average, over the cycle.
If inflation was rising at faster rate, or falling, it would be much tougher to keep the interest rate setting at its current levels.
With inflation under control, and the December quarter data not released until late January, the focus will now be on labour market conditions, currency shifts and consumer spending behaviour when the RBA next deliberates interest rates in November.
Other data released over the week included the Reserve Bank minutes from their last board meeting. There were no surprises in what transpired when the RBA board last met and kept the official cash rate on hold at 2.5%.
The RBA is still focussed on the Australian dollar; even though the dollar has fallen from around the US$0.94 mark earlier this year to US$0.88 more recently.
The RBA would like to see the Aussie dollar fall further which will boost our exports sector but potentially place some upwards pressure on inflation as import costs rise.
The minutes also highlighted the RBA’s growing caution around investment in the housing market and members discussed the importance of lenders maintaining strong lending standards. Importantly, the RBA noted that capital gains across the housing market had moderated from the highs of late 2013 but remained strong.
Weekly Clearance Rates
RP Data recorded 2,096 auctions results across the previous week which accounts for 86% of all auctions held.
The weighted average auction clearance rate remained below the 70% mark for the third week running last week, recorded at 68.6%. At the same time last year the weighted average clearance rate was slightly higher at 70.4%.
Auction volumes are roughly at the same level as one year ago; last week RP Data was monitoring 2,449 auctions across the capital cities, which was 79, or 3%, higher than a year ago.
The largest auction markets continued to record the highest clearance rates. Sydney’s auction market saw a success rate of 72% across 929 auctions and Melbourne recorded a clearance rate of 71.7% across 1,167 auctions.
Capital city auction clearance rates
Week ending October 19, 2014
Weekly Advertised Listings
Over the four weeks to the 19th of October, there were 48,929 newly advertised properties added the national market; the highest number of new listings since early March this year.
New listing numbers are roughly at the same level as a year ago (+0.8%) nationally, but across the capital cities vendors seem to be more confident, with the number of newly advertised properties up 3.6% compared with last year.
The largest rise in newly advertised stock numbers can be seen in Brisbane, where new listings are 14.9% higher than a year ago, and in Adelaide where new listing numbers are 12.2% higher.
There has been a reduction in new listing numbers compared with a year ago in Melbourne (-2.3%), Darwin (-4.2%) and Canberra (-9.3%).
Total advertised stock levels have been consistently rising during the Spring season and are now at their highest level since the end of June 2014.
Nationally there are 242,647 homes being advertised for sale (4.5% lower than a year ago) and across the capital cities there are 102,933 listings (-8.2% compared with last year).
Note that sales listings are based on a rolling monthly count of unique properties that have been advertised for sale.
Number of homes for sale
Residential property listings advertised for sale over the four weeks ending 19/10/2014
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