The house price weakness isn’t confined to Sydney. Melbourne prices edged lower in December and so far in January are flat. Prices in in Perth remain weak, while in Brisbane and Adelaide, the price rises are averaging less than 0.1 per cent per month over the last three months.
House prices will be a key issue for policy makers and markets in 2018.
My money is on the weakness being sufficient, along with other cracks in the economy, to keep overall GDP growth well below trend, inflation below the RBA target, unemployment nearer 6 per cent than 5 per cent and will see the RBA moving to cut interest rates as it see the risks of falling house prices seeping through to the rest of the economy.