fbpx

As this edition goes to press, the Australian Bureau of Statistics announced the quarterly Consumer Price Index, aka inflation, has jumped to 5.1 per cent this quarter. Michelle Marquardt, ABS Head of Prices Statistics, said this was “the largest quarterly increase since the introduction of the goods and services tax in 2000”.

The hike in inflation now leaves the door open for the RBA to increase the interest cash rate from its record low of 0.1 per cent, something that the RBA said wouldn’t occur until 2024.

As of Tuesday May 3, the RBA has lifted the official cash rate to 0.35%, the first rate rise in more than a decade, with more rises expected in the coming months.

In addition to the increased inflation rate and cash rate, pressure is building in the economy due to extensive lockdowns in China, resulting in supply chain issues and record-high oil prices.

Highly indebted households and those buyers who jumped into a record-high market are already beginning to feel the strain of the increased cost of living.

With cash rate increases expected every month well into 2023, the big question for investors and prospective home buyers alike is how high can interest rates go, and what impact will this have on the broader real estate market?

Download and read the full Market Essentials – May 2022 Report.