CBA CPI Forecast – Home Prices Fall by 15 Percent Over Next 18 Months
During a conference this week, the CBA published its latest CPI forecast, which has a number of interesting factors in it. One of these is that it has forecast that home prices will fall by 15 percent over the next 18 months. This forecast is important because it means that the housing market is still in a slump, and it has led to some uncertainty as to whether we will see a recovery or not. Home prices forecast to fall by around 15 per cent over the next 18 months
Despite the fact that home prices are predicted to fall 15 percent in the next 18 months, this does not necessarily mean that buying a home is more affordable. In fact, according to the National Association of Realtors, the typical first time buyer in the United States was 33 years old, and the typical purchase was a home above asking price. The report also found that millennials are buying more second homes.
Home price growth in Texas slowed in September, according to the Texas Repeat Sales Home Price Index, which accounts for compositional price effects. This is an industry-standard measurement of home price appreciation. While prices rose in most areas of the state, the rate of appreciation slowed from 21 percent in March to 11 percent in September.
The HPI is a good indicator of how home prices are expected to change in the coming years. According to the CoreLogic report, the HPI dated back more than 45 years. The HPI is released on the first Tuesday of each month. It includes a high-level press release, as well as commentary from the experts at CoreLogic.
The Texas Housing Affordability Index, or THAI, reflects the relationship between the median family income and the median-priced home. It is the most comprehensive measure of affordability in the state and the best indication of how housing prices will change over the next few years. The report found that while the THAI increased a few points, it remained below its long-term average of 74 percent.
The home-buying market in Texas was a sluggish one for the past few years. The latest report from the National Association of Realtors found that home sales slowed ten percent in the third quarter of the year. However, the housing inventory improved from three months to six months, which may be a sign of a calming market.
In the short-term, the housing market will cool as mortgage rates rise. Homebuyers will likely have to wait until the rate of inflation is controlled to see home prices rebound. However, the long-term picture is more rosy. In the coming years, the housing market will be better suited for homebuyers, as supply and demand will continue to work in tandem.
While the state of Texas saw a slight uptick in housing starts in July, the number of homes on the market increased significantly. The number of listings on the market grew 30 percent in the first quarter of the year. The state's active listings also climbed, with 85,600 listings on the market at the end of the second quarter.
The housing market has a lot of moving parts, including the construction of new homes and remodeling. The supply-side problems will lightstream loans reviews limit the pace of construction, while the supply-demand dynamics will keep home prices rising. However, the most important part is that housing demand will not recover until inflation is controlled. Non-discretionary inflation vs discretionary inflation
Discretionary and non-discretionary inflation are the two components of consumer price inflation. Both are calculated using a basket of goods. In the case of non-discretionary spending, goods and services are considered non-essential to the household, so they are less likely to be affected by price changes. On the other hand, discretionary spending is more directly affected by changes in relative prices. The RBA and Bank of Canada define discretionary spending as “the expenditure of a household on goods and services that are not considered to be essential for the basic needs of a household or that are less likely to be consumed”.
Discretionary spending is typically more volatile than non-discretionary spending, because consumers are more likely to change their spending patterns in response to changes in income and wealth. However, the overlapping growth rates for discretionary and non-discretionary spending have converged recently. Since late 2009, annual price changes for discretionary spending have become more closely aligned with the underlying growth rate for non-discretionary spending.
Both non-discretionary and discretionary inflation are expected to increase in Q2 22. Both categories are expected to have annual growth rates of 7.3%, which is above the RBA's forecast of 6.0%. However, non-discretionary inflation is forecast to increase by a smaller margin. The non-discretionary category is forecast to grow by 4.1% over the year, while discretionary spending is forecast to increase by 5.2%.
Non-discretionary inflation has been higher than discretionary inflation for the past five years, although the gap between the two categories narrowed at the beginning of the coronavirus pandemic. The impact of the pandemic has been to slow down growth rates for both categories. In recent months, the largest gap between non-discretionary and discretionary spending has been in clothing and footwear.
For the past six years, non-discretionary spending has been driven by household services, such as transport and housing. This is due to the fact that households spend a larger proportion of their expenditure on non-discretionary items. Non-discretionary spending is forecast to rise by 2.3% in September 2021, to 3.6% in October 2021, and to 4.1% in November 2021.
Discretionary spending is a measure of consumer spending that includes items such as basic necessities, legal obligations, takeaway meals, and more. It is also expected to include changes in relative prices.
Non-discretionary spending includes health and communication costs, housing and household services, and clothing and footwear. It has been consistently higher than discretionary spending since January 2005. However, the rate of growth for non-discretionary spending has fallen to its lowest point in September 2009, whereas discretionary spending has been growing at a higher rate. The difference between the two categories is largely due to price changes in housing and household services.
In the near-term, the price of electricity and fuels are expected to continue rising. However, the Office of Gas and Electricity Markets (Ofgem) has announced plans to introduce a national energy guarantee. This is expected to result in price increases for gas and electricity, which would be expected to contribute to upward pressure on non-discretionary inflation. Uncertainty in the forecast
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