Overview
The 1st half of 2016 has been quite colourful, both at a national and international level. Many national events – whether it is at Federal or State Government level – have resulted in a somewhat “confused” state as to which direction the property market is heading into. Whilst it was generally agreed that 2015 closed with a divergent property market, be it between capital cities or between capital and metropolitan (and regional) markets, the 1st half of 2016 is rife with predictions of a crash one minute and a recovery the next.
The Australian Consumer Sentiment is definitely a reflection of heightened societal uncertainty, for whilst its fluctuation pattern mirrors that of the 1st half 2015, the 1st half of 2016 moved at a greater magnitude; with the index reaching its highest level, since January 2014, in May 2016. That said there is a lean towards a positive direction as the Australian Consumer Sentiment Index has, on average, performed better than 6 or 12 months ago. In the 1st half of 2016 the index gave a positive reading three times (February – 101.3points, May – 103.2points, and June – 102.2points), whereas 12 months ago the index only gave a positive reading twice (February 2015 – 100.7points and May 2015 – 102.4points) and 6 months ago also only twice (November 2015 – 101.7points and December – 100.8points).
More than ever, the issue of housing affordability is at the forefront of Australia’s conversation; with many sides weighing in on how the issue can be addressed. Compared to 2015 monetary and fiscal policy played well together this year, with the Reserve Bank of Australia cutting the cash rate by 25 points to 1.75 on 3rd May 2016 – just hours before the Federal Budget 2016 was handed down. Any budgetary announcement has traditionally caused a stir in society as people become wary of what tax and benefits changes might impact them and thus their household disposable income. The cutting of cash rates at such a timely manner eases this angst, as it signals potentially lower mortgage repayments for owners. Indeed Australian Consumer Sentiment increased by 8.5% in May 2016, a stark contrast to 2015’s 6.9% decrease when the Federal Budget 2015 was handed down.
Foreign investment is once again a hot topic, with both State and Federal Government on the road to changing the rules of the game. From 1st July 2016 the Federal Government, through the Australian Taxation Office (ATO), is claimed to be targeting foreign residents, with a new tax rule applicable to any property
| KEY FACTS | |
| Consumer Price Index: | 1.3 % |
| Standard Variable Home Loan Rate: | 5.0% |
| Unemployment Rate: | 5.7% |
| Average Australia Fuel Price: | $1.24/L |
Click here for more information: 573_prd_aus_economic_report_2016o_no_crops