The Reserve Bank has raised its forecast for growth and inflation in its February statement on monetary policy.
The main change to the forecast was growth in December 2013, which increased to 2.5 percent from its November reading of 2.25 percent. Also, growth projections for 2014 have been increased to 2.25 percent to 3.25 percent.
An interesting side line to all of this was the announcement that the RBA was changing its measurement of the housing market. The current housing price index which covers only detached dwellings will be supplemented with an attached dwellings index which measures apartments and other attached homes.
To date, this attached dwellings market has been neglected from the index and will be incorporated in a consolidated “all dwellings’ index which you will see as the residential property price index.
My thoughts are that the RBA is looking for better quality information to assist its assessment of monetary policy. With the concerns mentioned in my last column, I feel that higher quality data from the housing market will better explain the real estate divide between the capital cities and regional Australia.
Looking ahead, with this week’s news from Toyota which formalised the death of the vehicle manufacturing sector in Australia, consumer confidence figures are the statistic to watch. Falling consumer confidence driven by job insecurity is one of the most potent headwinds to recovery.
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