It was certainly an exciting week for property related data releases this week with the RBA Board having their monthly meeting, Westpac and the Melbourne Institute releasing their consumer confidence figures and the ABS releasing its housing finance data as well as the latest labour force statistics.
As expected, following the RBA Board Meeting it was announced that the official cash rate would remain on hold this month at 3%. This was the third month in a row that the RBA has made no adjustment to rates and although the Reserve Bank Governor maintained there is still scope to reduce rates, the move to leave rates unchanged was supported by the positive data (detailed below) which was released following the RBA’s meeting.
The Westpac-Melbourne Institute’s Consumer Sentiment figures signaled growing confidence in the Australian economy, with their index recorded at 109.4 points during July. This was the second month in a row the index was above 100 points indicating that economic optimism was outweighing pessimism. The results were extremely encouraging given that just two months ago the index was recorded at 88.8 points indicating a strong pessimism towards the economy. The last two months has seen the index jump by 12.7% in June and 9.3% in July.
Housing finance data was also released this week and it showed that finance commitments for both owner occupied and investment housing has again increased during May 2009. During 2009, seasonally adjusted figures show that owner occupier finance commitments are up 23.5% and investment finance commitments have risen 10.9% and now match levels last witnessed during July 2008. 29.5% of all owner occupier finance commitments were taken on by first home buyers; up from just 17% a year ago. The number of first home buyer grants issued in May and June were at record levels, suggesting that first home buyer demand is not yet winding back.
Balancing the positive news, unemployment figures from the ABS show that the jobless rate has increased again and now sit at 5.8%. The Federal Government is forecasting the unemployment will rise to 8.5% by mid next year. With the recent economic data painting a brighter picture than most economists had expected it may turn out that the rate of unemployment does not rise this high.
Source: RP Data