You are here
Australia's housing boom over
[SYDNEY] The housing boom that has seen Australian home prices more than double since the turn of the century is "officially over," after data showed prices now flatlining, UBS Group AG said.
National house prices were unchanged in October from September, while annual growth has slowed to 7 per cent from more than 10 per cent as recently as July, CoreLogic data released Wednesday showed.
"There is now a persistent and sharp slowdown unfolding," UBS economists led by George Tharenou said in a report. "This suggests a tightening of financial conditions is unfolding, which we expect to weigh on consumption growth via a fading household-wealth effect." An end to Australia's property boom will be welcome news for first-time buyers, who have struggled to break into the market after surging prices propelled Sydney past London and New York to be the second-most expensive housing market. Less impressed may be property investors, already squeezed by regulatory lending curbs that drove up mortgage rates.
The cooling housing market may encourage the Reserve Bank to keep interest rates at a record low. A rate hike would be undesirable as it would put further downward pressure on dwelling prices, said Diana Mousina, senior economist at AMP Capital Investors.