Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Australia's central bank closely watching house price falls

Published 05/07/2018, 01:05 pm
Updated 05/07/2018, 01:10 pm
© Reuters.  Australia's central bank closely watching house price falls

© Reuters. Australia's central bank closely watching house price falls

SYDNEY, July 5 (Reuters) - Australia's central bank is carefully watching weakness in home prices in Sydney and Melbourne given the impact that could have on household wealth, a top official said on Thursday.

The Reserve Bank of Australia's (RBA) Head of Economics Analysis, Alex Heath, emphasised that recent economic data had been generally positive and the bank was more confident about the outlook for investment outside the mining sector.

However, she noted housing construction had plateaued, albeit at high levels, and was unlikely to contribute much to economic growth over the next couple of years.

The pipeline of work yet to be done was particularly strong in New South Wales and Victoria, where home prices had softened markedly in recent months.

"Housing price growth has been strong until recently in Sydney and Melbourne, where population growth has been strong," Heath told a conference at the Urban Development Institute of Australia in Wollongong.

"Given that housing accounts for around 55 percent of total household assets, we are paying close attention to these developments."

Data out this week from property consultant CoreLogic showed home prices in Sydney were down 4.5 percent in June from a year ago, the sharpest decline since the global financial crisis of 2008.

Annual price growth in Melbourne had slowed to just 1.0 percent, from a double-digit pace last year.

After a decade of runaway gains, the country's housing stock is worth around A$6.9 trillion ($5.09 trillion), according to estimates from the Australian Bureau of Statistics.

Heath added that she expected demand for housing to remain strong overall because population growth was also likely to remain strong.

Australia's population is growing around 1.6 percent a year, more than twice the average of the developed world, largely due to immigration, notably of people on student visas.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.