The moderate pick up in house prices in recent months is linked to a stalling in the growth of new supply, with new listings for sale falling and immigration inflows above official forecasts in the March quarter 2025. The resilient strength in the labour market has, for now, helped to support the housing market which has been further assisted by the early effects of lower interest rates.
Given current economic conditions, there is near unanimity that the RBA will resume its interest rate cutting cycle on 20 May with further interest rate cuts expected over the following 12 months. Low inflation, a soft economy and signs of a weakening in the labour market are all factors that has markets pricing in a cash rate below 3 per cent in the first half of 2026, down from the current 4.10 per cent.
Global investors and policy makers continue to assess the extent of the negative impact of US President Trump’s tariff policies. It is likely to remain a moving feast in the months ahead with some retaliation and adjustments to the tariff plans seemingly inevitable. One thing where there is unanimity is the effect of the tariffs – negative for international trade and global economic growth. The major uncertainty is the extent of the fallout.
The impact of the budget on macroeconomic conditions is broadly neutral, which was confirmed with the muted reaction in financial markets to the budget. The pre-conditions are in place for the RBA to deliver further interest rate cuts but the timing of the next rate reduction is, at this stage, open.
Despite the RBA commentary, financial markets are continuing to price in further interest rate cuts with a cash rate of approximately 3.40 per cent factored in by the first half of 2026. Softer economic data out of the US in recent weeks has helped reinforce the market pricing for lower interest rates.
The important news in the first month of 2025 centred on a further sharp deceleration in inflation, the full pricing in of a series of interest rates cuts from the RBA and the start of the Trump Presidency in the US.
The other major issue to unfold in Australia is falling house prices at a national level, but it remains the case that market conditions are uneven from city-to-city…
A busy 2024 ended with the RBA holding official interest rates where they started the year – at 4.35 per cent.
The RBA has now held official interest rates steady for more than a year despite the substantial fall in inflation, the weak economy, the slowing in wages growth and the flood of interest rate cuts around the world.
The last month has seen what might be called “green shoots” of an economic recovery in Australia, aided by an easing in cost of living pressures as inflation has retreated towards the RBA target band.
It is important to note that these encouraging signs are from a weak starting point – it is too early to be confident of a meaningful economic recovery, but it is encouraging to see some better news.
In summary, economic growth in the Australian economy remains weak, the unemployment rate is rising, wages growth is slowing and inflation is falling back towards the RBA’s 2 to 3 per cent target. The interest rate hikes since May 2022 are working.
The moderate pick up in house prices in recent months is linked to a stalling in the growth of new supply, with new listings for
Given current economic conditions, there is near unanimity that the RBA will resume its interest rate cutting cycle on 20 May with further interest rate
Global investors and policy makers continue to assess the extent of the negative impact of US President Trump’s tariff policies. It is likely to remain
The impact of the budget on macroeconomic conditions is broadly neutral, which was confirmed with the muted reaction in financial markets to the budget. The
Despite the RBA commentary, financial markets are continuing to price in further interest rate cuts with a cash rate of approximately 3.40 per cent factored
The important news in the first month of 2025 centred on a further sharp deceleration in inflation, the full pricing in of a series of
A busy 2024 ended with the RBA holding official interest rates where they started the year – at 4.35 per cent.
The RBA has now held official interest rates steady for more than a year despite the substantial fall in inflation, the weak economy, the slowing
The last month has seen what might be called “green shoots” of an economic recovery in Australia, aided by an easing in cost of living
In summary, economic growth in the Australian economy remains weak, the unemployment rate is rising, wages growth is slowing and inflation is falling back towards
We would like to acknowledge the Traditional Custodians of the lands, seas, and communities in which we provide our services. We would also like to pay our respects to the Elders past, present and emerging, and the continuing cultural influence they have on Australia.
Zagga Market Pty Limited (Australian Credit Licence 490904) ACN 611 662 401 acts as the Servicer of loans acting on behalf of the credit provider, Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786, trustee of the Zagga Investments Lending Trust
All portfolio numbers quoted correct as at 1 July 2025.
*Average investor return across the active portfolio as at 1 July 2025.
**Target return is after expenses and any applicable management fees for the year ended 30 June 2025. OCR = Australian Reserve Bank Official Cash Rate.
Past performance is not a reliable indicator of future performance and investments are subject to investment risk, fees and costs. Returns are not guaranteed.
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Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Economic conditions may change.
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