ANZ have recently published their quarterly property insights paper. Included in the report is a reflection on the current economic outlook and a deep dive into residential and commercial property trends. The report also provides commentary on structural changes in the office sector and a retail sector that remains resilient, despite soft consumer sentiment. Meanwhile, Industrial assets remain strong as demand continues to outstrip supply.
The Australian economy has been resilient
Australia’s GDP growth was a little soft in the first quarter of 2025, rising 0.2% q/q to be 1.3% higher over the year. Public demand fell 0.4% q/q, but it is still up 3.8% over the last year. ANZ Research expect public demand will continue to play an important role in supporting the economy. ANZ Research think the economy is in better shape than the headline GDP figure would suggest, with household sector income and balance sheet dynamics improving. Yearly growth in real household income is growing faster than consumption as savings increase, and the level of real income has already returned to the prepandemic trend. After picking up at the end of last year, momentum in consumer spending has stalled through 2025. The six-month annualised rate for retail sales, or the retail ‘pulse’, has slowed from 4.6% in January to 1.8% in May. ANZ-Roy Morgan Consumer Confidence is still in pessimistic territory, with US tariff announcements possibly impacting sentiment. Rate cuts should support spending and ANZ Research expect a lift in consumption and GDP growth through the latter part of 2025.
RBA surprises with a hold in July
In a surprise to the market, and ANZ Research, the RBA’s Monetary Policy Board left the cash rate unchanged at 3.85% in July. The Board did not seem as concerned about the global backdrop, and noted that markets have recovered following a period of heightened uncertainty in April. While there has been good progress on lowering inflation, the (less comprehensive) monthly inflation indicator came in a bit higher than the RBA were expecting in their last forecast. The Board decided that “it could wait for a little more information to confirm that inflation remains on track”. In other words, the Board implied that they could wait until their next meeting in August, where they would receive updated RBA forecasts and know the outcome of the June quarter inflation data. Indeed, the June inflation data has...
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