There may be signs inflation pressures are easing, giving the RBA time to think about future rate rises.
A surprise slowdown in inflation and further falls in property values that have wiped $53,000 from the average dwelling could force the Reserve Bank into reassessing its plans to drive up interest rates next year.
The biggest hit in percentage and absolute value terms has been Sydney where the median house value fell another 1.5 per cent last month. The median house value in Sydney has fallen to $1.243 million, a drop of $170,000 or 11.9 per cent since its peak at the start of the year. “Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire.”Lawless said of all the capital city markets, there was a chance Melbourne’s median value could slip to its pre-COVID level by March next year if prices there continued to fall by 0.8 per cent a month. All other capitals are expected to retain most of the run-up in values experienced during the pandemic.
Part of the fall was due to changes in the way households are spending that affect how the inflation rate is compiled. But there were also large falls in the prices of fruit and vegetables, which slipped by 6.3 per cent in October.Transport costs, driven up by higher petrol prices, lifted by 7 per cent in October.But there continues to be inflation pressures.
Treasurer Jim Chalmers noted there had been a slight easing in inflation pressures in October but warned there were further price pressures ahead.“The October result is yet to fully reflect the impact of the floods on grocery prices or the hit to energy bills caused by the war in Europe and the Coalition’s decade of policy chaos,” he said.
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