Dropping prices weaken RBA's confidence in the economy

By |

Declining property prices caused uncertainty in household consumption, leading to a disruption in the country’s economic growth.

According to a report by Bloomberg, dropping values are beginning to “overshadow” Reserve Bank of Australia (RBA) Governor Philip Lowe’s initial scenario of a sustained increase in prices, which would tighten the labour market and slowly drive inflation upwards.

The downturn is likely to worsen, with Sydney’s market declining 10% and banks pulling away from lending due to increased scrutiny.

“The outlook for household consumption continued to be a source of uncertainty because growth in household income remained low, debt levels were high and housing prices had declined. Members noted that this combination of factors posed downside risks,” the RBA said during its last policy meeting for the year.

Through a liaison with developers, the RBA also found that demand for new housing in eastern Australia had eased. Some developers reported that this weakening demand had become more evident. The demand for off-the-plan apartments had slid significantly since mid-2017.

Bill Evans, chief economist at Westpac Banking Corp, said that the minutes of the meeting implied the central bank’s reduced confidence in the economy.

“Taking into account the attention given to the credit, housing, consumer and external risks, these minutes should be interpreted more dovishly than we have seen over the course of 2018,” Evans said.

Top Suburbs : nundah , south brisbane , narara , newcastle , belmont

SHARE

Get help with your investment property



Do you need help finding the right loan for your investment?


When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here