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The Real Estate Institute of Australia (REIA) has urged Australians not to worry about a potential interest rate rise.
Reflecting on the newest data from the Australian Bureau of Statistics (ABS), REIA president Leanne Pilkington noted that the 3.6 per cent increase in the Consumer Price Index (CPI) in the 12 months to April 2024 “should not flag an increase in interest rates, merely a delay in a drop”.
March saw a 3.5 per cent rise in the past 12 months, while February saw a 3.4 per cent increase.
“The annual movement for the monthly CPI, excluding the volatile items of fruit and vegetables, automotive fuel and holiday travel and accommodation, rose 4.1 per cent in April, the same as for March and up on February’s figure of 3.9 per cent,” said Pilkington.
“For the last four months the figure has been, on average, at just over 4 per cent. This stickiness is the same as other countries are experiencing in getting inflation into the target range of their central banks, showing that the final hurdles are difficult.”
Over the past four months, housing was one of the most significant sectors to see a price rise, with a total increase of 4.9 per cent. Rents also grew, albeit less steeply than in previous months.
“Rental prices, supported by the Commonwealth Rent Assistance, showed a modest abatement in the rate of increase,” said Pilkington.
“Rents increased 7.5 per cent in the 12 months to April, down from 7.7 per cent in March, and 7.6 per cent in February. In monthly terms, rental prices rose 0.5 per cent in April, down from a 0.6 per cent rise in March.”
The REIA president attributed the abatement in rental rate rises to the government’s decision to increase CRA in March 2024, which resulted in reduced rents for eligible tenants.
“The figures highlight the importance of CRA in keeping a lid on rent increases for eligible tenants and support the REIA’s advocacy to increase the payment to levels of 20 years ago,” said Pilkington.
She concluded that “while the CPI figure taken alone can be seen as disappointing, it comes on the back of other economic data including retail figures this week showing one of the weakest markets for generations”.
While she acknowledged that the federal budget forecast of getting inflation down to 2.5 per cent by the end of this year “appears optimistic”, she emphasised that Australians need not fear a cash rate hike.
