Australian home prices slowdown ‘no cause for concern’
MELBOURNE/SYDNEY: Australia’s central bank governor said yesterday the current slowdown in the housing market isn’t a cause for concern but flagged the need for policy to remain at record lows for the foreseeable future with wage growth and inflation still weak.
Home prices across Australia’s major cities have fallen for successive months since late last year as tighter lending standards at banks cooled demand in Sydney and Melbourne – the two biggest markets.
Housing credit growth has hit its slowest pace in six years, building approvals have come off a peak and home prices posted their first annual drop since 2013 last month.
However, Reserve Bank of Australia (RBA) governor Philip Lowe said these issues are not a cause for concern.
“We shouldn’t fret just because housing prices are not rising at the rate they used to. And if they come down that’s okay,” Lowe said in Melbourne, responding to a question after a speech titled “Productivity, Wages and Prosperity”.
“House prices in Sydney and Melbourne are still 40% up from where they were in 2014. You’ve got to have a longer-term perspective here.”
The two cities comprise about 60% of Australia’s housing market by value and 40% by number of homes. – Reuters