Steeper property downturn seen in Australia
SYDNEY: Australian home loans slid sharply in December in a sign the downturn in the country’s once booming property market has further to run, creating more challenges for policymakers worried about the wider economic impact of a housing slump.
Home loans, a lead indicator for housing prices, tumbled 5.9% in December from November to A$17.4bil, the weakest in more than five years, official data showed.
The year-on-year plunge of 19.8% was the biggest since the 2008 global financial crisis.
Lending to first-home buyers too retraced sharply to be down 12.6% from a year ago. The disappointing numbers will be a worry for the country’s central bank which stepped up a warning on the housing market while signalling policy would be expansionary for a long time.
One of the concerns for the the Reserve Bank of Australia is the uncertainty around spending by heavily indebted households. But falling home prices could also start weighing on construction activity. Business conditions revived in January after an alarming drop the month before, but still pointed to cooling ahead.
“The housing outlook for Australia continues to deteriorate and this means we can expect the positive housing impact of 2016/17 to turn into a drag on housing inflation,” said Chris Rands, fixed income portfolio manager for Nikko Asset Management.