Please click here to view Shane Oliver’s views on the slump in housing prices in Australia
Key points raised are :
- The slump in national average home prices continued in October with prices down another 1.2% according to Cotality, their seventh monthly fall.
- The rapid decline, more rate hikes than expected and rising unemployment combined with the structural change associated with the tax hikes on investors suggest that the top to bottom fall is now likely to be around 15%.
- Prices aren’t expected to bottom until around the September quarter next year and should start a modest recovery in 2027-28 as the RBA shifts to rate cuts.
- The home price slump will weigh on economic growth via negative wealth effects, but it’s not significant enough yet for the RBA to shift gears toward cutting rates given high inflation is the more pressing problem. But it likely will be by the second half next year.
