De­mand from hun­gry prop­erty in­vestors puts cen­tral bank in tough spot

Port Douglas & Mossman Gazette - - FRONT PAGE -

AS the week­end auc­tion clear­ance rate in Syd­ney again topped 84 per cent, a study by the Switzer­land-based Bank for In­ter­na­tional Set­tle­ments found cen­tral banks had in­creas­ingly used pru­den­tial rules to bat­tle prop­erty mar­ket ‘‘booms and busts’’ in­stead of mone­tary pol­icy. This comes as the RBA’s record-low in­ter­est rates set up a po­ten­tially un­com­fort­able po­si­tion for RBA gover­nor Glenn Stevens. The RBA would not want to raise rates to soften prop­erty prices while the econ­omy was weak and af­ter the job­less rate last week hit a four-year high, an­a­lysts said. And higher rates would boost the Aus­tralian dol­lar, fur­ther strain­ing the econ­omy’s tran­si­tion to non-min­ing sec­tors such as man­u­fac­tur­ing, tourism and hous­ing . Led by a Syd­ney mar­ket that agents say is ‘‘hot’’, house prices are ris­ing at an an­nu­alised rate of about 8 per cent due to de­mand from in­vestors.

MICHAEL BENNET, GINA RUSH­TON

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