House prices are off the boil

Tue, 11 Nov 2014  |  

House prices are off the boil according to both the Australian Bureau of Statistics and RPData.

For the ABS, house prices rose just 1.5 per cent in the September quarter, with the annual rise of 9.1 per cent the lowest in a year and down from the 10.8 per cent peak in the March quarter 2014. With a very large 4.0 per cent increase dropping out of the annual data next quarter and given what we know about house prices so far in the December quarter, annual house price growth looks set to slip below 7 per cent when those data are released in 3 months.

The bottom line is that house prices are still rising, but not at a particularly alarming pace.

For the RPData house price series, which includes data up to and including today (I know the shortcomings of these daily data so don't shout!), prices rose 1.0 per cent in October and by just 0.2 per cent in the first 11 days of November. Importantly, the annual rate of increase has decelerated from a peak around 11.5 per cent to now be 8.9 per cent. Indeed, in the last 30 weeks, the annualised increase in house prices is 6.5 per cent.

Interestingly, of the five main cities, the RPData show an annual increase in Perth (2.7 per cent), Brisbane (5.0 per cent) and Adelaide (3.9 per cent) that are well contained. Only Sydney (annual increase still a hefty 13.4 per cent) and Melbourne (8.6 per cent) are prices too strong.

So does it matter?

Well, sort of. If house prices are cooling already without the implementation of macro prudential policies or interest rate hikes, the RBA may be happy to rest easy and allow for the price growth to ease naturally as it has already started to do. An interest rate hike to cool property would be silly, and macro prudential policies may be extremely complex with consequences outside the problem areas which are centred on Sydney and property investors.

A macro prudential tweak aimed at cooling investor demand may still be on the offing and it would be no bad thing. But it might be wise for the RBA, having missed the opportunity a year ago to cool the housing market, to do nothing and wait for the easing in house price pressures to continue to work its way through the market. It now seems very likely that by early to mid 2015, house prices will be recording very small changes in monthly and quarterly terms meaning that the for annual rate of house price increase will slip to 5 per cent and lower.

The market seems to be correcting without the need for a significant policy change. It soon will be time to move on from the problems in the labour market, with rising unemployment and plummetting real wages needed some attention.

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Wed, 29 Jul 2020



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The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link:   


The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.