Economic Wrap: Perth leads house price rebound while labour market eases

Inflation picks up slightly

Monthly CPI data was released last week, with headline inflation for Australia rising 0.8% for the month in August, bringing the annual rate to 5.2%. This is higher than July’s 4.9% but not unexpected as petrol and diesel prices rose a sharp 9.1% over the month. This also marks the first increase in the annual rate of inflation since April. However, core inflation (which excludes fruit and vegetables, automotive fuel and holiday travel) continued to ease in annual terms, down from 5.8% in July to sit at 5.5%. The continuation of the downward trend should provide some reassurance that the path for inflation is heading in the right direction.  

Perth leads housing price rebound

House prices have continued to rebound, rising 0.8% nationally in September, marking the eighth consecutive month of growth. The uptick was even stronger in Perth, with dwelling values rising 1.3% in September, taking annual growth to 8.8% over the year. This is the fastest rate of house price growth in the country and takes the median house price to a fresh record high. This is reflected in the strong demand for housing finance, with investor financing at its highest level since April 2015 while owner–occupier financing is still well above pre-COVID levels, despite trending downwards over the past year. Given the lack of properties currently on the market combined with a soaring population, expect house prices to continue trending upwards.  

Labour market cools

Job vacancy data released last week hinted at further easing in the labour market, albeit conditions remain tight. The number of job vacancies in Western Australia fell by 2,400 in the three months to August, to 52,500. This is the lowest number of job vacancies in two years but remains more than 2.5 times greater than the pre-COVID average. Combined with the slow upwards creep of the unemployment rate, this provides some evidence that WA’s labour market is continuing to cool.  

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