PEXA Group Welcomes RBA Rate Pause and State Governments’ Housing Market Support
By PEXA - 18 June 2024
PEXA Group (“PEXA” or “the Group”) today welcomes another pause in the cash rate at 4.35% by the Reserve Bank of Australia (RBA), following their latest Monetary Policy Board meeting.
PEXA’s Chief Economist, Julie Toth, said today’s confirmation of another interest rate pause is welcome news for current and prospective mortgage holders, who will be spared another squeeze on their household incomes to accommodate higher loan repayments.
“Evidence from bank spending data and consumer confidence surveys indicate that homeowners with a mortgage remain under intense pressure from stubborn core inflation and high interest rates. Looking ahead, this persistent inflation – despite weak GDP growth and household consumption – means the Cash Rate will not fall until core inflation is more firmly anchored to the 2-3% target band.”
Australia’s housing market stabilised throughout 2023 and has remained resilient into 2024 in terms of sales activity, and pricing, in most locations. PEXA’s Property Insights Report detailed that residential settlement transaction volumes increased in the first quarter of 2024 compared to the same period one year earlier, across the mainland states and across most price ranges.
Among those who already have mortgages, refinancing activity is still elevated as mortgagees seek to reduce their costs. PEXA’s Refinance Index confirms that refinancing remained high through early 2024 by historical standards and has risen again since April 2024. It is around 40% above the refinancing volumes observed during 2019 and 2020.
Ms Toth notes that in addition to closely watching the outlook for interest rates, property owners and buyers will need to navigate a range of changes to property-related taxes, charges and grants, through 2024-25, announced by various State Governments in this year’s round of Budgets.
“We welcome the NSW Government’s plan to build 30,000 affordable, social and rental homes on surplus government land. Once completed, this will help to boost housing supply, as will an additional 400 new build-to-rent dwellings for essential workers. Additional resources for the Housing Commissioner and a new Rental Taskforce to oversee NSW’s one million residential rental properties will help to improve security of tenure, and affordability, for renters.
“For NSW property investors however, the Budget included increases to the foreign purchaser duty surcharge and foreign owner land tax surcharge, for an estimated 20,000 foreign-owned NSW properties, and freezes the tax-free threshold for all properties that are subject to land tax.
“This freezing of the threshold at $1.075 million (unimproved land value) will gradually increase the number of rental properties subject to land tax, as rising property values push them over the threshold. The NSW Government estimates that 30,000 properties will be affected immediately.
“Collectively, these incremental tax increases may reduce the attractiveness of NSW as a place to invest in property and may reduce the number of homes available for rent in the private sector.
“It’s been a fortnight of housing-related Budget measures, with home buyers in Queensland and South Australia to receive greater direct assistance from their state governments.
“In Queensland, increased thresholds will give stamp duty concessions to first home buyers of properties worth up to $800,000 for a home and $500,000 for vacant land, with the maximum value of the concession also lifted.
“South Australia has gone one step further, by abolishing all stamp duty for all first home buyers, with no maximum property value for the stamp duty exemption or for the state’s first homeowner’s grant, worth $15,000, for purchases after 6 June 2024.
“These announcements in Queensland and South Australia will help first home buyers compete in extremely tight local housing markets and may even attract first home buyers – who are overwhelmingly younger skilled workers – from other states,” said Ms Toth.
-ENDS-
For more information, please contact:
Kate Prigg – Corporate Affairs Manager, PEXA
E: kate.prigg@pexa.com.au
M: 0497 595 580
About PEXA
PEXA is a world-leading ASX-listed digital property exchange platform and property insights solutions business. Since 2013, PEXA has facilitated more than 16 million property settlements through the PEXA Exchange in Australia, with 89% market reach, and in 2022 PEXA launched in the UK. The PEXA Group of companies, including: .id (Informed Decisions), Value Australia and Land Insight, delivers digital insights and property solutions that help government, financial institutions, banks and property practitioners to unlock the future value of property.