Home > Economics > House prices set to slide in capital cities

House prices set to slide in capital cities

It’s unusual to hear gloomy news from domain.com.au but here it is: House prices set to slide in capital cities. Some highlights:

  • Credit growth slows to 15 year low
  • Michael McNamara of Australia Property Monitors predicts 10% fall in prices this year

Even the article Maybe not all doom and gloom (by McNamara) is certainly negative on the property market saying that you need a long term view as an investor and that short-term speculators don’t make much money using that strategy anyway.

In Up or down? Next three months are crucial, Tim Colebatch discusses the slowing economy and the possibility of cash rate cuts by December.

Lateline Business was certainly very negative on the economy. The RBA left the cash rate unchanged today and everyone seems very excited that the RBA governer, Glenn Stevens, said today that rates were likely to go down next. Well, that’s not quite what he said but it does seem a reasonable way to interpret his words: “with demand slowing, the board’s view is that scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing”. I guess we must wait to be sure that inflation is under control after all CPI to June is running at 4.5%.

I was glad to see Steve Keen on Lateline Business last night who said “I don’t think there is any way of avoiding a recession” and it will not help even if the RBA were to reduce the cash rate. Steve mentioned that 40% of house prices were merely fueled by speculation and that “when this expectation goes, ultimately goodbye 40% of the current price of houses”.

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