Home News Sydney's housing downturn makes RBA anxious

Sydney's housing downturn makes RBA anxious

Font size :

The continued slump in Sydney's housing prices has just become the Reserve Bank of Australia (RBA)'s biggest worry.

The continued slump in Sydney's housing prices has just become the Reserve Bank of Australia (RBA)'s biggest worry. Will this force the central bank to cut rates next year?

Sydney's housing downturn is projected to result in greater risk to household consumption —housing prices in the city have already fallen by 10%, and market watchers expect further declines next year.

"Since 2016, the RBA's focus on financial stability has held them back from further rate cuts as they wait for wages and inflation to recover," Morgan Stanley analyst Daniel Blake told The Sydney Morning Herald.

Also Read: Sydney's housing dry spell predicted to linger until 2020

While RBA is far from panicking, market projections point to a $1trn cut from housing stock value should the housing market witness a 15% drop in house prices.

"In 2019, we see their focus turning to monitoring the negative wealth effects from a housing market adjustment," Blake said.

The central bank is still tracking the slow growth in household income. In a Bloomberg think piece, industry watcher Michael Heath said the ideal scenario for the central bank is to witness wages record healthy growth, which would help the property market find its trough quicker. This would make it possible for RBA to increase the cash rate for the first time since 2010.

"The worst-case scenario for policymakers would be a multi-year property downturn in Sydney and Melbourne -- the second-largest city -- along with stagnant wages. That, together with a slowdown in global growth, could force the RBA to deploy its remaining ammunition and push rates toward zero," he said.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

5 tips to help you buy in a slow housing market 5 tips to help you buy in a slow housing market

A buyer's market is not as easy to navigate to as it seems Read more

Australia to remain world's worst-performing housing market this year – report Australia to remain world's worst-performing housing market this year – report Don't expect a rebound in prices anytime soon ... Read more

This historic Italian town sells homes for a little over $1 This historic Italian town sells homes for a little over $1 The catch? You have to promise to renovate the home within the next three years ... Read more

How bad will the housing downturn turn out this year? How bad will the housing downturn turn out this year? While the worst is yet to come, a crash is still unlikely ... Read more

More mortgage news and articles

Sponsored Links

Saturday, Jan 19, 2019
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords