Eliza, Hey, good morning, Thanks for having me.

Eliza, Hey, good morning, Thanks for having me.

Yeah, thank you so much for your time. Now, rates kept on hold for now. It was a mixed reaction, wasn't it. Most of us were expecting that they were going to be cut.

Yeah, thank you so much for your time. Now, rates kept on hold for now. It was a mixed reaction, wasn't it. Most of us were expecting that they were going to be cut.

Yeah, there was a lot of commentary leading up to the rate decision that there's no longer the justification to keep the cash rate at three point eight five percent, and that's because you've had things like GDP growth come in in the past few weeks. It showed a really weak result for the country. We've seen things like a monthly inflation measure which isn't as full as the quarterly inflation read that we get, but it did show a decline in inflation, and more recently we saw weak retail sales. So all of this information told us that economic activity was slowing, inflation was coming down. But the RBA made it quite clear in their meeting yesterday that they wanted to wait for the full inflation quarterly report so they can really confirm that inflation is where they want it before they move rates lower. And I think that surprised a lot of people, but it really did reinforce that they're erring far on the side of caution. Yeah.

Yeah, there was a lot of commentary leading up to the rate decision that there's no longer the justification to keep the cash rate at three point eight five percent, and that's because you've had things like GDP growth come in in the past few weeks. It showed a really weak result for the country. We've seen things like a monthly inflation measure which isn't as full as the quarterly inflation read that we get, but it did show a decline in inflation, and more recently we saw weak retail sales. So all of this information told us that economic activity was slowing, inflation was coming down. But the RBA made it quite clear in their meeting yesterday that they wanted to wait for the full inflation quarterly report so they can really confirm that inflation is where they want it before they move rates lower. And I think that surprised a lot of people, but it really did reinforce that they're erring far on the side of caution. Yeah.

Now, I mean, what does it mean when you look at at home values, because we're sort of hearing anecdotally that over the last couple of weeks, you know, housing prices of have shot up in recent weeks due to some of those cuts.

Now, I mean, what does it mean when you look at at home values, because we're sort of hearing anecdotally that over the last couple of weeks, you know, housing prices of have shot up in recent weeks due to some of those cuts.

Yes essentially, yeah, yeah, so we had to cut back in and we also had one in May, and what that's done to the property market is clearly started to push prices higher because lower interest rates mean you can take out more debt. More debt means you've got more to spend on housing, and we've seen that, particularly in the Darwin market. It's Australia's most affordable capital city market, and since rates moved lower on February nineteenth, we've seen about a six percent increase in Darwin home values. That compares to a two percent increase in national home values. So it's clear that Darwin is essentially the biggest benefactor in terms of value uplift from rate cuts, which is good news for homeowners but obviously a challenge if you're trying to get into the market.

Yes essentially, yeah, yeah, so we had to cut back in and we also had one in May, and what that's done to the property market is clearly started to push prices higher because lower interest rates mean you can take out more debt. More debt means you've got more to spend on housing, and we've seen that, particularly in the Darwin market. It's Australia's most affordable capital city market, and since rates moved lower on February nineteenth, we've seen about a six percent increase in Darwin home values. That compares to a two percent increase in national home values. So it's clear that Darwin is essentially the biggest benefactor in terms of value uplift from rate cuts, which is good news for homeowners but obviously a challenge if you're trying to get into the market.

Yeah, so talk us through I guess some of what we are saying around around the Darwin market or even know out in Palmerstone.

Yeah, so talk us through I guess some of what we are saying around around the Darwin market or even know out in Palmerstone.

So over the past six months, we've seen not just a consecutive set of increases in home values monthly across the city, but we've seen a bit of an acceleration. So the Darwin market picked up by two point one percent in the month of May, we saw a one point five percent increase in the month of June, and the cumulative increase to date is about seven percent across the entire market. It's a pretty broad based increase, so we've seen uplifts in areas like Palmerston as well as well as Darwin City and it really is just that kind of broad based effect that I guess cheaper debt levels can create in housing market.

So over the past six months, we've seen not just a consecutive set of increases in home values monthly across the city, but we've seen a bit of an acceleration. So the Darwin market picked up by two point one percent in the month of May, we saw a one point five percent increase in the month of June, and the cumulative increase to date is about seven percent across the entire market. It's a pretty broad based increase, so we've seen uplifts in areas like Palmerston as well as well as Darwin City and it really is just that kind of broad based effect that I guess cheaper debt levels can create in housing market.

Is there a limit to how much the falling interest rates, like, if we do see another cut, how much they can then push those values up or I guess you know, the market will do what the market will do.

Is there a limit to how much the falling interest rates, like, if we do see another cut, how much they can then push those values up or I guess you know, the market will do what the market will do.

There is a bit of a limit because things are quite different in the market now compared to say, the last rate cutting cycle, which took place between the sort of early twenty twenty to November twenty twenty, and then the cash rate was held at zero point one percent through to April twenty twenty two. Now back then or since then, rather, market values nationally have risen by about forty percent, So housing is much less affordable than what it was five years ago, and that means that even its rates move lola, it's still hard to get into the market. We also see the consumer sentiment now is a lot lower, and that's because of things like this whole Trump tariff uncertainty and what that might do to economic activity, and that's causing buyers to kind of hold off big financial decisions as well. So that means that they will be a bit of a limit to what rate cuts do to the market. But for a market like Darwin, I suppose the strength is its relative affordability and there's more room for it to grow compared to other capital cities.

There is a bit of a limit because things are quite different in the market now compared to say, the last rate cutting cycle, which took place between the sort of early twenty twenty to November twenty twenty, and then the cash rate was held at zero point one percent through to April twenty twenty two. Now back then or since then, rather, market values nationally have risen by about forty percent, So housing is much less affordable than what it was five years ago, and that means that even its rates move lola, it's still hard to get into the market. We also see the consumer sentiment now is a lot lower, and that's because of things like this whole Trump tariff uncertainty and what that might do to economic activity, and that's causing buyers to kind of hold off big financial decisions as well. So that means that they will be a bit of a limit to what rate cuts do to the market. But for a market like Darwin, I suppose the strength is its relative affordability and there's more room for it to grow compared to other capital cities.

Yeah, and I mean, I guess when you look at the housing market as well in Darwin is there's not a huge amount of bailable at the moment either.

Yeah, and I mean, I guess when you look at the housing market as well in Darwin is there's not a huge amount of bailable at the moment either.

That's right. So stock levels are pretty tight relative to historic terms. So the flow of new listings coming to market is pretty subdued. And again that could be because it's taken a while for this market to take off, and sellers have been holding off to wait for more price growth before they put their property on the market. Of course, there's issues with the construction sector that have evolved across the country and really become quite clear through the COVID period. And again I think just that economic uncertainty might see sellers holding back a bit as well, and that all contributes to the additional upward pressure on prices.

That's right. So stock levels are pretty tight relative to historic terms. So the flow of new listings coming to market is pretty subdued. And again that could be because it's taken a while for this market to take off, and sellers have been holding off to wait for more price growth before they put their property on the market. Of course, there's issues with the construction sector that have evolved across the country and really become quite clear through the COVID period. And again I think just that economic uncertainty might see sellers holding back a bit as well, and that all contributes to the additional upward pressure on prices.

Now, what are some of the forward projections, I mean, beyond sort of now and beyond August. I guess we're all waiting to see now whether there's kind of be a right cut in August.

Now, what are some of the forward projections, I mean, beyond sort of now and beyond August. I guess we're all waiting to see now whether there's kind of be a right cut in August.

Look, unless there's a big surprise in the inflation data. I think it will confirm what the RBA needs needs to know for them to move the rates lower in their August meeting. Beyond that, most of the major economic forecasting houses are predicting at least one more rate cut. Of the big four banks, you've got two that are predicting will finish the year with a three point three five percent cash rate, and the other two are predicting a three point one percent cash rate. So there's definitely more cuts that would appear to come down the line, you know, all else being steady, I suppose that if we don't get any nasty inflationary surprises before the end of the year.

Look, unless there's a big surprise in the inflation data. I think it will confirm what the RBA needs needs to know for them to move the rates lower in their August meeting. Beyond that, most of the major economic forecasting houses are predicting at least one more rate cut. Of the big four banks, you've got two that are predicting will finish the year with a three point three five percent cash rate, and the other two are predicting a three point one percent cash rate. So there's definitely more cuts that would appear to come down the line, you know, all else being steady, I suppose that if we don't get any nasty inflationary surprises before the end of the year.

Well Coatalities head of Research, Eliza Owen, great to speak with you this morning. Thank you so much for your time anytime.

Well Coatalities head of Research, Eliza Owen, great to speak with you this morning. Thank you so much for your time anytime.

Thank you, thank you.

Thank you, thank you.

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