Australian home values continue to climb with RBA expected to cut rates
Home values look set to continue climbing in the latter half of the year after nearly every corner of the country recorded growth in June, and as the Reserve Bank faces mounting pressure to further cut interest rates.
Fresh data from Cotality shows Australian home values grew for the fifth month in a row, climbing 0.6 per cent in June and 1.4 per cent across the quarter. Over the past 12 months, national home values have climbed 3.4 per cent, taking the median value of a home to $836,586.
Economists see a rate cut at the next RBA meeting in early July as all but locked in, as the economy faces headwinds including conflict in the Middle East, US President Donald Trump's tariffs and slowing domestic growth, while inflation has become a background concern.
The May monthly inflation data released by the Australian Bureau of Statistics revealed lower-than-expected inflation, which CreditorWatch chief economist Ivan Colhoun said cleared the way for the RBA to reduce interest rates at its July meeting.
The Melbourne Institute's monthly inflation gauge, which reliably tracks the official inflation measure, also showed price pressures remain contained. Released on Monday, it showed core inflation lifted by 0.1 per cent in June, with the annual rate easing to 2.6 per cent. Headline inflation also rose by 0.1 per cent to be up by 2.3 per cent over the past 12 months.
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However, further cuts in interest rates without sufficient growth in supply are likely to fuel further growth in housing values and house prices as borrowing costs fall and buyers flock into the market.
One year since the federal government began tracking its target of building 1.2 million new homes in Australia by the end of the decade, most analysts estimate Labor is on track to fall more than 250,000 homes short of its goal.
The Property Council of Australia called for all levels of government to redouble their efforts, including improving tax settings and planning systems, and for the federal government to commit to a framework of rolling five-year housing targets.
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