In money news that affects your hip pocket.
Rates, rates, rates
Speculation is increasing that 2017 is when we will see the first interest rate rise since 2010, but not all economists are convinced that growth will be strong enough to warrant it.
Yesterday the Reserve Bank of Australia decided to leave the official cash rate on hold at 1.5 per cent in its final meeting of the year.
“Conditions in the housing market have strengthened overall, although they vary considerably around the country,” said RBA Governor Philip Lowe.
The RBA has cut rates twice this year, in May to 1.75 per cent and in August to 1.5 per cent. But the last time the official cash rate rose was in 2010.
While financial markets have begun pricing in bets of a rate rise in 2017, AMP Capital chief economist Shane Oliver thinks it’s too early to act on that.
“…we remain of the view that its way too early to rule out further rate cuts next year.
“The risks to growth are on the downside, inflation is likely to remain below target for longer than the RBA is forecasting as wages growth remains weak, the RBA may also need to offset increases in bank mortgage rates that are being driven by the rise in global bond yields and the Australian dollar remains too high.
“So we are allowing for one rate cut in the first half of next year. Regardless of whether there will be further cuts or not, a rate hike remains a 2018 story at the earliest,” said Mr Oliver in a note to investors.
Cheapest houses to buy
We’ve found yet another study that’s trying to pinpoint where in Australia is the best place to buy property at a bargain price.
Research by Aussie Home Loans and CoreLogic found the most affordable suburbs lie within 10 – 20 kilometres of each capital city.
This in itself isn’t surprising because we know that city fringe areas tend to be cheaper, yet issues around employment or transport and commuting often hold people back when it comes to buying into them.
The study, which was highlighted in news.com.au report, found the cheapest suburb closest to a city centre nationally is Clarendon Vale, a suburb located about 10km east of Hobart.
The news report said that Clarendon Vale has a median house price of $153,531, and overall homes there are more than $180,000 cheaper than Hobart’s median house price and almost four times less than the combined Australian capital city median house price of $610,000.
Christmas sales strength
The amount of money spent on Christmas shopping this year is expected to be higher than we’ve seen for sometime.
A Fairfax Media report says that more than 90 per cent of retailers expect consumer confidence to hold steady or increase next year, and almost two-thirds expect their earnings to increase by at least 5 per cent, according to a survey by accounting firm Deloitte.
This is good news for businesses and the economy and perhaps adds to that speculation of a rate rise sometime next year.
The same survey found that more than 70 per cent of retailers said they planned to increase their store footprint this financial year in the face of greater competition from foreign retailers such as Zara and H&M.
