🦘 Rate Cut Forecasts Delayed Further, Potential Qantas Competitor, Foreign Investment in Aussie Real Estate

G’day everyone!

Here’s what we’ve got in store for you today:

• Rate Cut Forecasts Delayed Further

• Potential Qantas Competitor

• Foreign Investment in Aussie Real Estate

Let’s have a look at the market snapshot before jumping into the news:

NAB’s Grim Forecast: Interest Rate Relief Pushed Back

Brace yourself, Aussie borrowers, NAB just dropped a bombshell on interest rate cuts.

Initially penciled in for November 2024, the National Australia Bank now expects no relief until May 2025.

What’s behind the shift? Well, inflation decided to show off, hitting 4% year-on-year in May—higher than the projected 3.8% and up from April’s 3.6%.

NAB’s economists pointed to a noticeable slowdown in economic growth - a mere 0.1% in the last quarter and 1% for the year.

Even with sluggish progress, inflation's drag race pace caught everyone off guard.

The RBA, preferring a 'lower for longer' approach, aims to keep rates lower compared to other major economies, potentially leading to a prolonged peak.

If June’s inflation data packs a punch, we might see another rate hike in August.

But for now, NAB predicts the RBA will stay put unless inflation wildly strays from the expected path.

AMP hopped on the delay train too, pushing their forecast for rate cuts to February next year, as chief economist Shane Oliver flags a 45% chance of an August rate hike.

Meanwhile, CBA and Westpac still hold out hope for a cut in November, but acknowledge the unfolding economic drama might tip the scales for another hike.

Stay tuned, folks. It’s a bumpy ride in the world of interest rates!

Qatar Airways Eyes 20% Stake in Virgin Australia: A Game-Changer for the Skies?

Qatar Airways is in hot pursuit of a 20% stake in Virgin Australia, and this move could make major waves in Australia's aviation waters.

The proposed deal with Bain Capital, Virgin Australia's owner, is expected to be revealed as early as next week.

So, what's in store if this deal gets the green light?

First up, Qatar Airways would secure a foothold in the Australian market, something the Gulf carrier has been keen on after its expansion plans got the scrapped last year.

With this stake, Qatar Airways would be in a prime spot to give the Qantas-Emirates alliance a run for its money.

Aviation expert Geoff Thomas even predicts this could mean cheaper international flights for all.

But hold your boarding passes - this isn't a done deal yet.

The transaction must clear hurdles with Australia's competition watchdog and the Foreign Investment Review Board.

Not to mention, the federal government might play spoiler, given past national security concerns and a not-so-distant Doha Airport incident.

Virgin Australia, which hit rock bottom with a mountain of debt in 2020 and was scooped up by Bain Capital, has been on a rocky recovery path.

A Qatar Airways entry could shake things up, potentially lowering flight prices and giving Qantas some serious competition.

In summary, this potential 20% stake acquisition by Qatar Airways in Virgin Australia could revolutionize the Australian aviation sector.

It's a battle of economic winds versus political headwinds - let's see which way the jets fly!

International Spotlight: Foreign Buyers' Rising Interest in Aussie Real Estate

Foreign interest in Australian property is seeing a notable rise, with buyers from China, Hong Kong, and India leading the charge.

Despite comprising only about 1% of total property transactions, these foreign investments are making big waves in the market.

According to the Australian Taxation Office (ATO), foreign buyers made 5,360 property purchases valued at $4.9 billion in 2022-23, up from 4,228 purchases worth $3.9 billion the previous year.

The average price tag? A cool $914,000.

Top foreign investors include:

1. China: $3.4 billion

2. Hong Kong: $0.6 billion

3. Vietnam: $0.4 billion

4. India: $0.3 billion

5. Taiwan: $0.3 billion

6. Singapore: $0.3 billion

7. Nepal: $0.2 billion

8. Indonesia: $0.2 billion

9. UK: $0.2 billion

10. South Africa: $0.1 billion

Eliza Owen from CoreLogic emphasizes that there are limitations on what non-residents can purchase.

She argues that merely banning foreign buyers won't address the broader issues of housing affordability.

Instead, she suggests focusing on systemic housing market reforms to tackle these challenges.

So, while foreign buyers represent a small fraction of the overall market, their substantial investments are making waves in the Australian real estate landscape, sparking both intrigue and debate.

Boom Time for Aussie Tourism: International Visitors Flocking and Spending Big

Forget the COVID-19 slump; Australia is now buzzing with international tourists who are not just visiting but spending like never before!

New figures from Tourism Research Australia reveal that tourists from hotspots like New Zealand, China, the UK, Japan, and the US are splurging more per night compared to pre-pandemic times.

Queensland is leading the pack, with Brisbane and the Sunshine Coast smashing overnight spending records.

Brisbane alone saw a jaw-dropping $3.2 billion spent, while the Sunshine Coast enjoyed a cool $371.1 million.

Peter Lynch, who runs Blue Dolphin Marine tours in Hervey Bay, noted a significant uptick in tourists, particularly from North America and Europe.

These visitors seem to have fallen in love with Queensland, touring locales like the Whitsundays and the Southern Great Barrier Reef with post-2019 spending levels.

Tourism Minister Michael Healy is thrilled, citing Queensland as the "top performer" for tourist spending.

He excitedly pointed out that these international guests "stay longer and spend more" - exactly the kind of visitors Australia aims to attract.

While most regions such as Victoria, Tasmania, and the ACT are catching up to pre-COVID spending levels, the Northern Territory saw a drop.

But with arrivals from South Korea and Canada on the rise, the tourism rebound looks promising, even as Australia waits for the full return of tourists from China, Hong Kong, and Taiwan.

You Made It!

If you’ve read all the way up to here, we just wanted to let you know that you’re an absolute legend!

Time to go to work and show off how clued up you are about what’s going on in the business world 💪

Keep an eye out for tomorrow's newsletter. Until then, we’d love to get your feedback below!