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Australia CoreLogic House Prices (Aug.)

The drag from the current lockdowns on the housing market won’t last, but we expect house price growth to slow in earnest next year as affordability constraints bite.
Ben Udy Australia and New Zealand Economist
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Australia & New Zealand Economics Weekly

Housing downturn to weigh on activity

The housing downturn is now in full swing. While that hasn’t prevented a solid rise in consumption in Q2, we think falling wealth will be a drag on consumer spending next year. What’s more, our forecast that house prices will eventually fall 15% from their April peak would be consistent with dwelling investment falling sharply in the coming years. The upshot is that the housing downturn will bring the Australian economy close to recession next year.

1 July 2022

Australia & New Zealand Data Response

Australia CoreLogic House Prices (Jun.)

The monthly decline in house prices in June was the largest since 2019 but is unlikely to be the sharpest decline in the current downturn. We think house prices will eventually fall by 15% from their April peak, which will weigh heavily on GDP growth next year.

1 July 2022

Australia & New Zealand Data Response

Australia Retail Sales (May 2022)

The strong rise in retail sales in May highlights the strength in the Australian economy and is consistent with our view that the RBA will continue to hike rates aggressively in the months ahead.

29 June 2022

More from Ben Udy

Australia & New Zealand Economics Weekly

Reopening moving closer as vaccine rollout speeds up

The easing of restrictions for vaccinated people in New South Wales announced today fell short of expectations but with the vaccine rollout accelerating, Australia’s lockdowns should end towards the end of October. Meanwhile, the RBNZ sounded hawkish this week and with restrictions set to ease across most of New Zealand next week, the Bank may not wait until next year before hiking rates.

27 August 2021

Australia & New Zealand Data Response

Australia Retail Sales (Jul 2021)

The decline in retail sales in July highlights the impact that lockdowns are having on the Australian economy. And with lockdowns spreading and intensifying in August, sales will fall further before they rebound.

27 August 2021

Australia & New Zealand Chart Book

Delta not clipping the wings of RBNZ hawks yet

New Zealand has entered a draconian lockdown and new infections continue to rise. The lockdown prompted the RBNZ to refrain from hiking interest rates at its August meeting and financial markets were only pricing in a 50% chance of a rate hike in October at the start of this week. However, that probability jumped to 80% following hawkish comments by Deputy Governor Hawkesby on Tuesday.  He noted that the Bank had considered the case for a 50bp hike at its August meeting and that the outlook for monetary policy wasn’t closely linked to lockdowns. Indeed, the Bank’s August Statement acknowledged that while a renewed virus outbreak would pose the biggest downside risk to economic activity, the “economy is resilient to periods at higher alert levels if there is significant government support provided”. We still assume that the more contagious Delta variant will prove too difficult to control to allow a marked easing of restrictions over the coming weeks and expect the Bank to delay the first rate hike until next year. But if the measures succeed in reining in the outbreak before long, the RBNZ may still hike in October.    

26 August 2021
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