[Sydney, Reuters]-Deputy Governor of the Reserve Bank of Australia (Central Bank, RBA) said the deterioration of the domestic real estate market was hurting household consumption on the 17th and was a major impediment to economic growth and inflation It pointed out. Despite the three rate cuts this year, this situation is expected to continue for at least the next year.
However, it has been forecasted that housing construction will recover by 2021, against the background of rising housing prices in recent months, stable population growth, and record low interest rates.
Housing construction is a major sector of the Australian economy, accounting for about 2% of total employment and 6% of GDP.
Vice President Debel pointed out that the slowdown in construction activity is still going on in a talk in Sydney.
“We expect housing investment to fall an additional 7% over the next year. There is some risk that the decline will be greater than this,” says GDP by the peak from the peak of housing construction. The view that the elongation is reduced by about 1 percentage point is shown.
Australian house prices and construction activity peaked about two years ago, with housing starts permitting about 40% below the end of 2017 levels.
Housing market conditions are also affecting consumption. The central bank estimates that if the house price falls by 10%, household consumption will decrease by 1.5%.
Debel also noted that recent market deterioration has had a “greater than expected” ripple effect on inflation. In the consumer price index (CPI) component basket, rent and new home purchase together account for about one-sixth.