![\"Gdp](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/gdp-growth-world-800x655.gif\")
<\/p>\n![\"Inflation](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/inflation-advanced-economies-800x655.gif\")
<\/p>\n![\"Gdp](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/gdp-growth-800x595.gif\")
\n\n<\/li>\n<\/ul>\n
- \n
- The Consumer Price Index (CPI) <\/a>\u00a0rose 0.9% in March quarter.<\/li>\n
- Annual CPI inflation was 2.4 per cent in the March quarter, unchanged from the December quarter.<\/li>\n
- The Trimmed mean provides a view of underlying inflation by reducing the effect of irregular or temporary price changes that can impact the CPI.\u00a0 Trimmed mean annual inflation was 2.9 per cent, down from 3.3 per cent in the December quarter.<\/li>\n<\/ul>\n
![\"All](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/All-groups-CPI-Australia-quarterly-and-annual-movement-1-800x444.jpeg\")
<\/p>\nHousehold Sector<\/span><\/h2>\n
- \n
- The following chart shows how the disposable income for Aussie households has dropped over the last year as they have grappled with rising costs, yet it has picked up recently.<\/span><\/li>\n
- Despite the Reserve Bank's best efforts to slow down household spending, we\u2019re still spending up big on discretionary items such as clothes, restaurants, and lifestyle, defying cost of living pressures.<\/li>\n
- According to the ABS: <\/a>in March:\n
- \n
- Household spending fell 0.3% month-on-month on a\u202fcurrent price, seasonally adjusted basis.<\/span><\/li>\n
- In seasonally adjusted, current price terms household spending decreased for six of the nine spending categories. The largest decreases were in:\n
- \n
- alcoholic beverages and tobacco (-2.6%)<\/span><\/li>\n
- hotels, cafes and restaurants (-1.1%)<\/span><\/li>\n
- transport (-0.5%).<\/span><\/li>\n<\/ul>\n<\/li>\n
- In seasonally adjusted, current price terms, household spending on goods rose 0.1% month-on-month, driven by increased spending on food, household appliances and tools, purchase of vehicles, and goods for recreation and culture.<\/li>\n<\/ul>\n<\/li>\n
- In seasonally adjusted, current price terms, household spending decreased for four out of the eight states and territories. The strongest decreases were in:<\/span>\n
- \n
- Queensland (-1.3%)<\/span><\/li>\n
- New South Wales (-0.3%)<\/span><\/li>\n
- South Australia (-0.3%).<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
This chart also shows our savings ratio has now dropped to below pre-pandemic levels as we keep spending our stashed cash to support our lifestyles.<\/span><\/p>\n
![\"Household](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/household-income-and-consumption-800x663.gif\")
<\/p>\n- \n
- I keep careful track of consumer confidence<\/a> because it's a good leading indicator of what's ahead for our economy and property markets.<\/li>\n
- The media's continual barrage of negative news about the economy, inflation and interest rates is having a significant impact on consumer sentiment.<\/li>\n
- Lately, consumer confidence has been bouncing up from historically low levels.<\/li>\n
- I see consumer confidence rising moving forward as Aussies realise inflation has peaked and that interest rates will keep falling.<\/li>\n<\/ul>\n
![\"Consumer](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/consumer-sentiment-800x749.gif\")
<\/p>\n- \n
- While rising interest rates and inflation have eaten away at the average household budget, in general, Aussies have significantly more equity in their homes than they had before the pandemic, and they started the recent rising interest rate cycle with considerably more savings stashed in their savings or offset accounts than they had at the beginning the pandemic.<\/li>\n
- The following chart shows our net wealth position, and that our main assets are in real estate (particularly our homes) and financial assets (including our superannuation.)<\/li>\n
- As you can see, the net wealth position of Australian households is still high since asset growth has outpaced the increased debt levels, meaning our net wealth position, while falling a little lately, is very strong.<\/li>\n
- The Australian residential property market is valued at over $11.1 trillion<\/a>, yet there is only around $2.4 trillion worth of debt against this large asset base. In fact, 50% of homeowners don't have a mortgage against their homes.<\/li>\n<\/ul>\n
![\"Household](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/household-wealth-and-liabilities-800x679.gif\")
<\/p>\n![\"Housing](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/housing-prices-and-household-debt-800x677.gif\")
<\/p>\n- \n
- We have now experienced 27 months of property growth, however our housing markets have been very fragmented.<\/li>\n
- Australian property values reached new heights in April, reversing a recent short downward trend earlier in the year. And with the main interest-rate cut, I expect our housing market to pick up as buyers return.
\n![\"Housing](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/housing-prices-800x698.gif\")
<\/li>\n - Currently, Australia has a shortfall of housing, which is particularly showing up in our rental markets with historically low vacancy rates and skyrocketing rents.<\/li>\n
- The government has a plan to build 1.2 million homes in the next 5 years<\/a>, but I can't see how this will be achieved.<\/li>\n
- The cost of residential construction has risen substantially in the last few years, in part because of the lack of available skilled labour and supply chain restrictions.<\/li>\n
- This means the cost to build new apartments has risen to such an extent that most developments on the drawing board (see the following chart of dwelling approvals) are not currently financially viable and won\u2019t be built until the market is prepared to pay substantially more than the current prices.<\/li>\n
- It has been estimated that currently we have a deficit of over 200,000 properties, something that won't be made up any time soon.<\/li>\n
- In other words... there is no end in sight for the undersupply of dwellings. It also means that there is substantial inbuilt equity in established properties as their replacement cost is very much higher than their current market value.<\/li>\n<\/ul>\n
![\"Private](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/private-residential-building-approvals-800x624.gif\")
<\/p>\nWhile the property pessimists were making a fuss about low housing loan commitments, which are clearly a leading indicator of what's ahead for our property markets, the following chart shows that they have picked up recently and are well above long-term averages.<\/p>\n
In particular, investor lending is up over 30% in the last 12 months. In other words, strategic investors are taking advantage of the current window of opportunity to get into the housing market.<\/p>\n
![\"Housing](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/housing-loan-commitments-800x658.gif\")
<\/p>\nBusiness Sector<\/span><\/h2>\n
\n- \n
- Australian businesses are facing a continual conveyer belt of challenges, including the rising cost of living which is dampening discretionary spending as the RBA is hell-bent on slowing our economy.<\/li>\n
- The near-term business outlook is one of softening consumption and investment growth, tightening government expenditures, and high debt costs.<\/li>\n
- This troubled backdrop has been reflected in low business investment, which now seems to be picking up.<\/span><\/li>\n<\/ul>\n<\/div>\n
![\"Business](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/business-investment-800x676.gif\")
<\/h2>\nLabour Markets<\/span><\/h2>\n
- \n
- Australia's labour market continues to show impressive resilience in the face of high-interest rates and unprecedented global challenges.<\/li>\n
- The ABS<\/a> has reported the following Key Statistics<\/li>\n<\/ul>\n\n\n
- \n
- \n\n\n
- \n
- \n\n
In trend terms, in April 2025:<\/p>\n
- \n
- unemployment rate remained at 4.1%.<\/li>\n
- participation rate remained at 67.0%.<\/li>\n
- employment increased to 14,622,100.<\/li>\n
- employment to population ratio remained at 64.3%.<\/li>\n
- underemployment rate increased to 6.0%.<\/li>\n
- monthly hours worked decreased to 1,967 million.<\/li>\n<\/ul>\n<\/div>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n
- \n
- Australia's unemployment rate, a key indicator of labour market health, has been at very low levels for a number of months now.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n
![\"State](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/state-unemployment-rates-800x619.gif\")
<\/p>\n- \n
- The labour force participation rate is an estimate of an economy\u2019s active workforce. The formula is the number of people ages 16 and older who are employed or actively seeking employment, divided by the total non-institutionalized, civilian working-age population.<\/li>\n
- The participation rate in Australia averaged 63.51% from 1978 until 2022, as you can see from the chart below the participation rate has increased over the last few years as a bigger percentage of Australians have entered or re-entered the workforce.<\/li>\n<\/ul>\n
![\"Employment](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/employment-and-participation-rates-800x593.gif\")
<\/p>\n- \n
- As you can see from the chart below, service-related industries have had significant growth, and in particular, there has been strong growth in the healthcare, accommodation and food services industries.<\/li>\n<\/ul>\n
![\"Employment](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/employment-growth-by-industry-800x750.gif\")
<\/p>\n- \n
- Currently, there are 328,900 jobs advertised<\/b><\/a> a decrease of 4.5% from November 2024.\n
- \n
- Private sector vacancies were 291,700, a decrease\u00a0of 5.4% from November 2024.<\/li>\n
- Public sector vacancies were 37,200, an increase of 3.0% from November 2024.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
![\"Job](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/job-vacancies-and-advertisements-800x654.gif\")
<\/p>\n- \n
- While national average wages have underperformed inflation over the last couple of years, meaning that \u201creal\u201d wages have actually fallen, we are now experiencing moderate wage increases.<\/li>\n
- Recently the Fair Works Ombudsman increased the minimum award wage.<\/a><\/li>\n<\/ul>\n
![\"Wage](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/wage-price-index-growth-800x625.gif\")
<\/h2>\nInterest Rates<\/span><\/h2>\n
- \n
- Interest rate levels set by the RBA respond to changes in inflation. When rates rise, they slow economic growth and discourage borrowing, typically signalling a strong economy. On the other hand, low interest rates promote economic growth.<\/li>\n
- The RBA cut rates for the second time this cycle in May. Financial markets think there will be another rate cut by August, and a third by November. <\/div>.<\/li>\n<\/ul>\n
![\"Australian](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/australian-cash-rate-800x600.gif\")
<\/p>\n![\"Rba](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/02\/RBA-rate-tightening-cycles-since-1980-800x454.png\")
<\/p>\n- \n
- Despite the sharp rise in interest rates over the last few years, home loan arrears remain at post-GFC lows, defying those property pessimists who forecast that significant levels of mortgage stress would lead to forced sales by homeowners who got over their heads in debt.<\/li>\n<\/ul>\n
![\"Banks](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/banks-non-performing-assets-global-800x625.gif\")
<\/p>\n
- Despite the sharp rise in interest rates over the last few years, home loan arrears remain at post-GFC lows, defying those property pessimists who forecast that significant levels of mortgage stress would lead to forced sales by homeowners who got over their heads in debt.<\/li>\n<\/ul>\n
- Currently, there are 328,900 jobs advertised<\/b><\/a> a decrease of 4.5% from November 2024.\n
- As you can see from the chart below, service-related industries have had significant growth, and in particular, there has been strong growth in the healthcare, accommodation and food services industries.<\/li>\n<\/ul>\n
- Australia's unemployment rate, a key indicator of labour market health, has been at very low levels for a number of months now.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n
- \n
- \n
- New South Wales (-0.3%)<\/span><\/li>\n
- hotels, cafes and restaurants (-1.1%)<\/span><\/li>\n
- In seasonally adjusted, current price terms household spending decreased for six of the nine spending categories. The largest decreases were in:\n