News & Tips

Good afternoon,

Hard to say a quieter week when the one data release was such a key one. But looking ahead, next week is massive. Cotality house prices, September building approvals, and of course, the RBA decision on Melbourne Cup Day, when no one is expecting a cut, but everyone will be hanging on the updated forecasts and comments from the RBA after the decision.

Highlights of the week:

- In the only real news of the week, inflation jumped materially. Underlying inflation (what the RBA really cares about) rose to 3.0% annually, due to a 1.0% rise in the September quarter. While the headline increase was driven by electricity rebates rolling off, underlying inflation is being driven by rising housing costs and market services.

- This result is much higher than market and the RBA’s own forecasts, killing any chance of rate cuts in November or December meetings. It also saw the market pare back it’s forecast of 2026 cuts, with only one more cut now fully priced in by mid-2026, with about a 50% chance of it being delivered by March.

- Much of what happens next will depend on December quarter inflation data (which is expected to ease) delivered by the ABS in late January. Of course, the RBA will be keeping an eye on unemployment and household spending as well.

- Cotality’s preliminary auction data showed a general slowing of clearance rates last weekend, coming in at the lowest level since mid-June. The easing trend has been evident since mid-September, but it’s still holding above its national long term average, implying price growth will continue.

- Melbourne’s clearance rate was 72% on a huge volume of auctions (1,835), the biggest auction weekend since December 2021, at the height of the pandemic.

Have a great weekend!

Chief Economist

Matt Bell