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Australia CoreLogic House Prices (Jul.)

House prices are continuing to surge and forward indicators suggest the upswing has a little further to run. Even so we think house price growth will slow in 2022.
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

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Australia & New Zealand Chart Book

Vaccination threshold may be hit in four months

With new virus cases hitting fresh highs this week, Sydney’s lockdown has been extended until end-August and looks set to last for months given the high transmissibility of the Delta variant. Melbourne also briefly re-entered lockdown this month, though restrictions have now been lifted. Other states may manage to keep Delta at bay, but with NSW accounting for one-third of nationwide output, we’re forecasting a 1% q/q decline in Q3 GDP. However, we expect growth to rebound in Q4. The government has now announced that the domestic economy will fully reopen when 70% of the eligible population are fully vaccinated. We estimate that may happen in about four months if daily vaccinations reach 0.8% of the population by the end of this quarter and stay there until year-end, from 0.6% over the past week.

30 July 2021

Australia & New Zealand Economics Weekly

RBNZ to tighten policy as inflation surges

The RBNZ announced an end to its asset purchases at this week’s meeting. And given the Bank’s hawkish tone, along with the strong inflation data in Q2, we now think the Bank will begin lifting interest rates in August. The strength in New Zealand’s inflation adds to the near-term upside risk to our forecasts for goods inflation in Australia. But even if goods inflation eases further as we expect, the tightening labour market will still put pressure on wage growth and services inflation before long which is why we expect the RBA to hike interest rates earlier than it currently anticipates.

16 July 2021

Australia & New Zealand Data Response

New Zealand Consumer Prices (Q2)

We had already expected the RBNZ to hike rates in August and the surge in inflation in Q2 only bolsters our confidence in that forecast.

16 July 2021
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