The issue remains Sydney where prices on the last three months have risen 3.1 per cent – annualised 12.5 per cent or so, which is high, but even this is down on the 15 per cent plus annual growth a few months ago.
Once the Sydney house price euphoria subsides – and it looks to have in recent weeks with a glut of property on the market and auction clearance rates easing lower – house prices could well start to fall.
The initial stages of this decline would be welcome news. It would take away an imbalance in the economy, improve affordability and eliminate some of what is clearly a speculative element in the Sydney price boom.
It would also allow the RBA to cut interest rates and foster a lower Aussie dollar, essential issues if the overall economy is to maintain a 3 per cent growth pace in 2015 and for the unemployment rate to stabilise at 6.25 per cent.
The fear of course would be a sharper fall in house prices with all of the problems that entails, but that remains low risk and something to be discussed another day, once we get a few more months of flat or falling prices, especially in Sydney.