Cheaper mortgages, tamed inflation and even higher home prices in store for next year
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Australia's top economic forecasters expect the Reserve Bank to start cutting interest rates by March next year, taking 0.35 points of its cash rate by June. The panel of 29 forecasters assembled by The Conversation expects a further cut of 0.3 points by the end of 2025. The forecasts were produced after last week's news of a higher than expected monthly consumers price index. Only two expect higher rates by mid next year. Only four expect no change. Eight of the 29 expect the first cut to come this year, by either November or December. One of them is Luci Ellis, who was until recently assistant governor (economic) at the Reserve Bank and is now at Westpac. She and her team are forecasting three interest rate cuts by the middle of next year, taking the cash rate from 4.35 to 3.6 per cent. The panel expects inflation to be back within the Reserve Bank's 2-3 per cent target band by June next year, and to be close to it (3.3 per cent) by the end of this year. The panel expects wages growth to fall from 4 to 3.5 per cent over the year ahead, contributing to downward pressure on inflation, but to remain higher than prices growth, producing gains in so-called real wages. The panel expects Australia's unemployment rate to climb steadily from its present historically low 4 to 4.4 per cent. Panellists expect China's economic growth to slip from 5.3 to 5 per cent and US growth to slip from 2.9 to 2.4 per cent. Australia's economic growth is expected to climb from the present very low 1.1 to 1.3 per cent by the end of this year and to 2 per cent by the end of next year. Home prices are expected to continue to climb notwithstanding economic weakness. Sydney prices are expected to increase a further 5 per cent in the year ahead after climbing 7.4 per cent in the year to May. Melbourne prices are expected to rise a further 2.8 per cent after climbing 1.8 per cent in the year to May. The panel expects non-mining business investment to continue to climb in the year ahead, by 5.2 per cent, down from 6.9 per cent. It expects the Australian share market to climb by a further 5.6 per cent.

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https://theconversation.com/cheaper-mortgages-tamed-inflation-and-even-higher-home-prices-how-29-forecasters-see-australias-economic-recovery-in-2024-25-233244