Home price data another window into tax change fallout

House price data will show how tax cuts and interest rate increases for investors continue to impact the property market.

Cotality property analytics data is expected to show national home values ​​falling in June after the federal budget shifted into negative gear and the capital gains tax cut.

The changes accelerated the current decline in Melbourne, Sydney and Canberra.

Borrowing costs were already rising before the budget, but investors have increasingly abandoned the property market since then.

Challenger chief economist Jonathan Kearns said prices were most likely to decline in established suburbs.

“An investor trying to sell an existing investment property will find less demand there… so the key will be on prices in those areas,” he told AAP.

AMP chief economist Shane Oliver predicted national house values ​​would fall 0.3 per cent in June, led by a 1.2 per cent decline in Sydney and 0.9 per cent in Melbourne.

Monday’s RBA credit data may show signs of a slowdown in investors’ mortgage lending, he said.

While the budget has had a positive impact on housing affordability, the government’s efforts to increase housing supply still fall short.

Construction approval figures for May, due to be released by the Australian Bureau of Statistics on Wednesday, will show Australia falling further behind its target of building 1.2 million new homes by mid-2029.

Only 16,710 housing permits were distributed in April; this was well below the 20,000 required.

“Given what’s going on with interest rates and house prices, you would expect approvals to continue to fall rather than continue to rise,” Dr Kearns said.

“Increasing the housing supply to make housing more affordable doesn’t look good.”

The rising cost of construction materials due to the war in the Middle East and the Federal Reserve’s threat of further interest rate hikes could further constrain the construction pipeline.

A former RBA official, Dr. Kearns said inflation and employment data released last week did not make the picture any clearer and that the possibility of another rate hike in August was reasonable.

But Chancellor of the Exchequer Jim Chalmers was optimistic about the outlook for inflation, saying the government now expects inflation in the current financial year to peak at around 4.25 per cent, rather than the five per cent predicted in the May budget.

But speaking to the ABC’s Insiders program on Sunday, he said Australia should stick to the ceasefire between the US and Iran to help keep oil prices low and wider inflationary pressures at bay.

Headline inflation for the year fell to 4 percent in May, but core inflation, which excludes variable items, rose to 3.6 percent.

Following the release of figures and strong employment data, money markets are pricing the possibility of an interest rate hike in August at around one in five.

The probability of an increase by Christmas is priced at around 40 percent.

The minutes of the bank’s last meeting in June, where it kept the cash interest rate constant at 4.35 percent, will be released on Tuesday.

Wall Street investors, meanwhile, have turned their attention from AI-related chip stocks to healthcare amid concerns about volatility.

The S&P 500 closed Friday with a 0.05 percent loss at 7,353.95 points, the Nasdaq index with a 0.24 percent decrease at 25,297.62 points, and the Dow Jones index with a 0.09 percent decrease at 51,876.11 points.

Australian stock futures rose 16 points, or 0.18 percent, to 11,807.

The benchmark S&P/ASX200 index rose 15.5 points or 0.18 percent to 8,764.2 points on Friday, while the All Ordinaries index rose 12.6 points or 0.14 percent to 8,964.2 points.

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