After two years of double-digit growth, the Sydney house price index gained just 3.2 percent in the year to September... RBA balanced weaker jobs, strong housing in decision to hold...
Runaway property market shows first signs of cooling
(Bloomberg) -- Offshore hedge fund managers and priced-out young Australians have long argued the pace of house price growth in the nation’s biggest cities is unsustainable. They may finally be right.
After two years of double-digit growth, the Sydney house price index gained just 3.2 percent in the year to September, the weakest increase since 2012, according to the latest government data. Melbourne’s rise of 6.9 percent was the slowest in more than a year.
The dip comes amid increased warnings from the central bank of a looming oversupply of inner-city apartments, with Morgan Stanley analysts saying there could be a surplus of 100,000 units by 2018. Fitch Ratings this month cut its outlook for the Australian banking sector, citing “key risks” around the housing market, while a measure of consumer confidence in property is the lowest in a year.
“I just don’t think it can continue,” Paul Dales, chief Australia and New Zealand economist at Capital Economics Ltd. in Sydney said by phone. “Overall market conditions aren’t really consistent with this strength going much further.”
RBA balanced weaker jobs, strong housing in decision to hold
(Bloomberg) -- Australia’s central bank balanced “considerable uncertainty” in labor market momentum and resurgent property prices in Sydney and Melbourne in its decision to leave interest rates unchanged.
The minutes of this month’s policy meeting also explicitly set out the board’s ongoing debate on the impact of its five-year easing cycle on asset prices and household debt. The record-low 1.5 percent cash rate is designed to help absorb unwinding mining investment and boost prices in the economy.
“The board has sought to balance the benefits of lower rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets,” the Reserve Bank of Australia said Tuesday. “Members recognized that this balance would need to be kept under review.”
The easing of monetary policy to foster a transition to services exports from resource investment has prompted a renewed borrowing binge that’s sent household debt to a record high and property prices on the east coast to stratospheric levels. Governor Philip Lowe, who took the helm in September, has signaled a greater emphasis on financial stability and markets have since slashed bets on the chances of rates falling further.
(Bloomberg) -- Offshore hedge fund managers and priced-out young Australians have long argued the pace of house price growth in the nation’s biggest cities is unsustainable. They may finally be right.
After two years of double-digit growth, the Sydney house price index gained just 3.2 percent in the year to September, the weakest increase since 2012, according to the latest government data. Melbourne’s rise of 6.9 percent was the slowest in more than a year.
The dip comes amid increased warnings from the central bank of a looming oversupply of inner-city apartments, with Morgan Stanley analysts saying there could be a surplus of 100,000 units by 2018. Fitch Ratings this month cut its outlook for the Australian banking sector, citing “key risks” around the housing market, while a measure of consumer confidence in property is the lowest in a year.
“I just don’t think it can continue,” Paul Dales, chief Australia and New Zealand economist at Capital Economics Ltd. in Sydney said by phone. “Overall market conditions aren’t really consistent with this strength going much further.”
RBA balanced weaker jobs, strong housing in decision to hold
(Bloomberg) -- Australia’s central bank balanced “considerable uncertainty” in labor market momentum and resurgent property prices in Sydney and Melbourne in its decision to leave interest rates unchanged.
The minutes of this month’s policy meeting also explicitly set out the board’s ongoing debate on the impact of its five-year easing cycle on asset prices and household debt. The record-low 1.5 percent cash rate is designed to help absorb unwinding mining investment and boost prices in the economy.
“The board has sought to balance the benefits of lower rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets,” the Reserve Bank of Australia said Tuesday. “Members recognized that this balance would need to be kept under review.”
The easing of monetary policy to foster a transition to services exports from resource investment has prompted a renewed borrowing binge that’s sent household debt to a record high and property prices on the east coast to stratospheric levels. Governor Philip Lowe, who took the helm in September, has signaled a greater emphasis on financial stability and markets have since slashed bets on the chances of rates falling further.
