Australia Why Australia's biggest bank is tipping 12 per cent house price plunge
Bright start for ASX, banks main laggards
Australian shares have started the week higher and only the banks have prevented bigger gains.Healthcare shares were best of the bunch on Monday and market giant CSL was up by about one per cent at 1200 AEDT.
Australia's biggest home lender is expecting property prices to fall by 12 per cent soon after official interest rates go up again.
The Commonwealth Bank is forecasting double-digit plunges in Sydney,and Canberra in 2023, following strong gains since the end of 2020.
Philip Lowe, the Governor of the Reserve Bank of Australia, is now indicating the cash rate will be raised from a record low of 0.1 per cent in 2023 instead of 2024 as previously promised.
But the Commonwealth Bank's head of Australian economics Gareth Aird is predicting interest rates will now be raised in November 2022, marking the first cash rate increase in 12 years.
How YOUR tax dollars pushed up the price of houses in Australia
A Reserve Bank official has blamed government spending programs during the pandemic for pushing up the price of Australian homes, with house values surging 30 per cent in a year. Luci Ellis, an assistant governor on economic policy with the Reserve Bank of Australia, suggested pandemic stimulus measures were responsible, with house values in some coastal areas surging by more than 30 per cent in just a year.
'The Australian housing market is in the twilight of an incredible boom that has been fuelled by record low mortgage rates,' he said.
Commonwealth Bank predictions for home prices
SYDNEY: 2021 (Up 27 per cent); 2022: (Up 6 per cent); 2023 (Down 12 per cent)
MELBOURNE: 2021 (Up 17 per cent); 2022 (Up 8 per cent); 2023 (Down 10 per cent)
CANBERRA: 2021 (Up 26 per cent); 2022 (Up 7 per cent); 2023 (Down 10 per cent)
BRISBANE: 2021 (Up 26 per cent); 2022 (Up 9 per cent); 2023 (Down 8 per cent)
Surprising reason why Australia will be spared US inflation shock
Reserve Bank governor Philip Lowe is predicting Australia will be spared American-style inflation despite the global supply chain crisis. Lower Covid infection rates are one key reason why.Reserve Bank Governor Philip Lowe said that unlike the US, Australian workers were more willing to return to customer-facing jobs as a result of lower Covid infection rates.
ADELAIDE: 2021 (Up 22 per cent); 2022 (Up 6 per cent); 2023 (Down 8 per cent)
Why Australians are too scared to ask for a pay rise so many jobs
Luci Ellis, an assistant governor on economic policy with the Reserve Bank, has revealed why Australian workers are too afraid to seek a pay rise despite job vacancies being at a 13-year high.Despite bosses struggling to recruit staff, the Reserve Bank of Australia's assistant governor on economic policy Luci Ellis said a lack of confidence was still stopping workers from being assertive.
PERTH: 2021 (Up 13 per cent); 2022 (Up 3 per cent); 2023 (Down 9 per cent)
HOBART: 2021 (Up 29 per cent); 2022 (Up 5 per cent); 2023 (Down 12 per cent)
DARWIN: 2021 (Up 17 per cent); 2022 (Up 7 per cent); 2023 (Down 8 per cent)
Surging inflation hits alcohol, cigarette, petrol prices in Australia
Alcohol, cigarettes and petrol don't just incur excise - also known as the 'sin taxes'. Consumers who enjoy or use these products have been hit with double-digit price rises in the past year.Some popular items have gone up price by levels well beyond the consumer price index, indicating that the sharp increases in inflation in the US and other countries will soon take hold in Australia.
Source: Commonwealth Bank of Australia forecasts for dwellings or houses and units together
Mr Aird is now predicting the Reserve Bank will raise the cash rate to 1.25 per cent by the September 2023, a level unseen since mid-2019, which 'lies at the heart of our expectation that home prices will contract'.
Should that prediction materialise, the RBA would be raising rates five times, on each occasion by 0.25 percentage points judging by previous moves.
The Commonwealth Bank is expecting Sydney property prices to climb by 27 per cent in 2021, before slowing to 6 per cent in 2022 and plunging by 12 per cent in 2023.
In the year to October, Sydney's median house price surged by 30.4 per cent to an even more unaffordable $1.334million, CoreLogic data showed.CBA forecast Melbourne prices rising by 17 per cent this year, before growing by a more subdued 8 per cent in 2022 and diving by 10 per cent in 2023.
Kyle Sandilands weighs in on Australia's tipping culture
He's one of Australia's wealthiest media moguls, who is never afraid to splash the cash when it comes to good service. And on Monday, Kyle Sandilands, 50, weighed in on the age-old tipping debate in Australia - saying that while he believes Aussies should tip staff like they do in the US, he thinks the patron should decide how much based on service alone.Kyle, who is throwing his support behind virtual tipping app TapJar, told The Daily Telegraph: 'You tip like a champion if you are being super served or if the waiter is hot, male or female, or if they are entertaining or have a little pizazz.
Melbourne's mid-point house price has grown by an annual pace of 19.5 per cent to $972,659 as Canberra's equivalent value rose by 29 per cent to $985,040.
Canberra was also tipped to see double-digit falls, following a 26 per cent rise in 2021, a 7 per cent gain in 2022 before a 10 per cent plunge in 2023.
Australia wide, property prices were tipped to grow by 22 per cent in 2021, 7 per cent in 2022 before plummeting by 10 per cent in 2023.
In October, house and apartment values nationally rose by 21.6 per cent, marking the sharpest annual increase since early 1989.
By comparison, wages in the year to September edged up by just 2.2 per cent.
The mid-point national property price of $686,339 is now so dear someone earning an average, full-time salary of $90,329 would owe the bank six times their salary, even with a 20 per cent deposit.
The Australian Prudential Regulation Authority considers a debt-to-income ratio of six or more to be risky.
Mr Aird said strong property price growth could not be sustained as wages growth remained weak.
'As home prices move higher, affordability becomes stretched,' he said.
Now Palaszczuk won't let Queenslanders go to SYDNEY
Queensland Premier Annastacia Palaszczuk said going to Sydney for a day or two would be 'out of the question' until the state reached 90 per cent of its population fully vaccinated against Covid-19. The claim was in response to a question about whether people who travel from Queensland to Sydney for a day or two 'for work' will still require a PCR test in order to return home.'We're looking at that, you do need to have a PCR test,' she responded. 'At the moment, going to Sydney for a day or two would be out of the question until we get to that 90 per cent double dose.
'That can be improved via a reduction in mortgage rates or higher income.
'But at some point the tailwind of lower mortgage rates on prices wanes unless there are further cuts in interest rates.'
The Commonwealth Bank is expecting house prices across Australia to rise by 25 per cent in 2021 before slowing to 6 per cent in 2022 and falling by 11 per cent in 2023.
Apartment values were expected to rise by 14 per cent this year, 9 per cent next year and fall by 7 per cent in 2023.
Australia's biggest banks have already raised their fixed rate home loans multiple times in a matter of weeks, gradually ending the era of 2 per cent mortgage rates.
'The phenomenal lift in prices is not over yet given dwelling prices are still rising briskly in most capital cities,' Mr Aird said.
'But near term indicators of momentum coupled with the recent move higher in fixed rate mortgages suggest that conditions will moderate from here.'
Regional areas have done even better than capital cities, with prices rising by 24.6 per cent compared with 24 per cent in the capital cities.
Before the pandemic, younger first-home buyers willing to commute could buy a house on the Central Coast, an hour's drive north of Sydney.
But mid-point house prices there have surged by 35.4 per cent in the year to October to $954,330 as more people were able to work from home.
Woy Woy, on the Brisbane Water and near a train station, is even more expensive at $962,538.
Queensland's Sunshine Coast saw a 32.5 per cent increase, taking median house prices to $946,405, making it much dearer than nearby Brisbane's $731,392.
Victoria's Mornington Peninsula had a 33.5 per cent increase, taking its mid-point price for a home with a backyard to $979,554, making it marginally more expensive than greater Melbourne's $972,659.
The 44 surprising areas outside the big cities where prices rose 30% .
House prices have risen by more than 30 per cent in a year in 44 regional council areas. Remote parts of WA and Tasmania were on the list along with desirable parts of coastal Queensland and NSW.While Byron Bay, Noosa, the Gold Coast and Kiama were on the list, the areas with the sharpest increases were in remote parts of Western Australia and Tasmania - where prices climbed by 45 per cent.