The June quarter’s CPI figures for 2017 shows the trend of low interest rates continuing into the future, which means good times for property buyers and renters, which conversely isn’t so good for landlords, according to the Real Estate Institute of Australia (REIA).
“The All Groups CPI increased by 0.2 per cent in the June quarter, giving an annual increase of 1.9 per cent. This is marginally lower than the annual increase to the March quarter of 2.1 per cent,” said Malcolm Gunning, REIA president.
“The annual change for both the analytical series of trimmed mean and for the weighted median was 1.8 per cent, with the annual change in the trimmed mean being the same for the past four quarters and the weighted mean up by 0.1 percentage point compared to the year, to the March 2017.
“This is below the RBA’s target zone of 2 per cent to 3 per cent and suggests the continuation of historically low interest rates for some time yet.”
Meanwhile, the Housing Group increased by 0.3 per cent for the quarter and by 2.4 per cent over the last year to June 2017. Rents rose minutely by only 0.2 per cent for the quarter and 0.6 per cent for the last year, providing relief for renters, but giving landlords a minimal rise in profits.
One of the reasons behind the rise in the Housing Group was attributed to new residential property purchases, along with gas and other household fuels.
“From 2013, when investment in housing started to pick up, we have seen the rate of increase in rents slow down in Australia. For the last three quarters, the annual changes have been 0.6 per cent – the lowest annual increase since December 1994,” Mr Gunning said.
“The latest CPI figures show that the increased investment in housing through the current taxation arrangements has kept growth in rents lower than they have been historically.
“In Sydney and Melbourne, where much of the investor activity has been focused on the increase in rents in the past 12 months, have been 2.5 per cent and 1.7 per cent respectively.”
Mr Gunning added that the latest inflation data indicates interest rates are likely to hold for the near future, as CPI figures play a major role of the RBA’s decision to alter the cash rate.