Expectations of falling house prices lead to a self-fulfilling philosophy, as buyers slow down, auction settlement rates plummet and sellers are forced to withdraw.
There is a growing consensus that Australia is facing the biggest drop in the Australian real estate market in modern history, a prospect well predicted by columnist Christopher Joye.
Containing inflation should inevitably mean that borrowing costs will increase by at least 1.5 percentage points more in December and possibly up to 2.5 percentage points in June next year.
On the average $ 615,000 mortgage (as calculated by the Australian Bureau of Statistics), repayments will increase by about $ 430 a month due to the latest increase of 50 basis points, according to broker Mortgage Choice.
The recent reversal of extreme movements in June 2023 bond futures is a welcome recognition that the RBA will not apply too much to rate hikes.
June 2023 futures forecast a 4.5 percent cash rate a few weeks ago. They are now setting a cash price of 3.54 percent, which may be enough to control inflation and not cause a recession.
Top economists have a number of RBA maximum cash rate forecasts on the market for June 2023 ranging from Gareth Aird’s 2.1% at the Commonwealth Bank to Bob Cunneen’s 3.75% at MLC and the 5% from Stephen Anthony to Macroeconomics Advisory.
Lowe, who last month said inflation would reach a high of 7%, said he expected inflation to peak at the end of this year and then fall back to the 2% to 3% range. next year. This points to possible rate cuts at the end of 2023.
Lowe may have calmed the markets for the time being, but there is considerable uncertainty among fund managers about the outlook for the August earnings reporting season.
Profit notices are likely to start flowing later this month, as the audited accounts for June 30 show higher operating costs that affect profit margins.