Posted on Thursday, April 28th, 2011 in by Matt Garmony
The Reserve Bank of Australia (RBA) reported yesterday that Australia’s Consumer Price Index (CPI)rose by 1.6% in the March quarter increasing the annual inflation rate by 3.3%, with economists predicting similar levels for the rest of 2011. This will undoubtedly cause the RBA to increase official cash rates to keep a hold on inflation.
What effect will this have on the Perth property market? The residential and commercial property market is extreemly subdued at present with agents reporting a lack of buyers in the market. An increase or percieved future increase in interest rates will continue the subdued property market conditions and we may even see a decline in residential values in the short term. The only sector of the market that is showing positive signs is the office rental market with a falling vacancy rate following take up of stock available for lease. Enquiries to leasing agents indicate rental levels are just starting to increase in the CBD and fringe CBD locations. This is driven by a continued growth in the resource sector which confirms Perth has a two tiered economy. Retail and industrial sectors are flat as businesses and consumers not directly related to the resource sector conserve their spending and expansion plans.