According to Dr Jane Murray, Head of Research Australasia for Jones Lang LaSalle, the increase in official rates will most likely affect those areas of the economy where spending has been growing at significantly above average rates for some time, specifically being the residential and retail sectors.
“The latest monthly residential building approval numbers and retail turnover figures exceeded market expectations and would have lent weight to the RBA’s decision today,” she says.
Dr Murray believes that while the 25 basis points increase will not have major material impact on household disposable income, it is the expectation of further rate rises that is likely to dampen spending levels in these sectors.
“The firming pressure on retail yields that Jones Lang LaSalle has seen over recent years and particularly the past 12 months should abate,” she says.
“Median yields for Sydney and Melbourne regional centers are now sitting at around three quarters of a%age point lower than as at December 2002, which is below average prime office yields,” she says.
Jones Lang LaSalle Research
Forecast Yields Q4
Indicative Market | December 2002 actual | December 2003 forecast |
RETAIL (Median yields) | ||
Sydney regional | 7.25 | 6.5 |
Sydney sub regional | 8.5 | 8.0 |
Melbourne regional | 7.5 | 6.75 |
Melbourne sub-regional | 9.0 | 8.25 |
INDUSTRIAL (Average yields) | ||
Southern Sydney Prime | 9.0 | 8.5 |
South East Melbourne | 9.0 | 8.75 |
