25 Mar 2015
Australian property market risks highlights the need for policy action – Rabobank
FXStreet (Barcelona) - The Rabobank Team comments on the RBA’s Financial Stability Review, noting that the current commercial and housing property sector demands some policy action from the RBA on the macro-prudential front.
Key Quotes
“The RBA’s Financial Stability Review this morning noted that risks in the commercial property market appear to be growing; for the housing sector risks continue to revolve around the mortgage market, and that “Ongoing strong speculative demand would tend to amplify the run-up in housing prices and increase the risk that prices in at least some regions might fall significantly later on”, or in plainer language, what goes up can come down.”
“That dynamic is very much on the RBA’s mind; yet given the only way the RBA is going to get AUD down from here is to cut rates again, especially if the Fed is backing off for now, those housing and commercial property issues are arguably going to require policy action on the macro-prudential front.”
Key Quotes
“The RBA’s Financial Stability Review this morning noted that risks in the commercial property market appear to be growing; for the housing sector risks continue to revolve around the mortgage market, and that “Ongoing strong speculative demand would tend to amplify the run-up in housing prices and increase the risk that prices in at least some regions might fall significantly later on”, or in plainer language, what goes up can come down.”
“That dynamic is very much on the RBA’s mind; yet given the only way the RBA is going to get AUD down from here is to cut rates again, especially if the Fed is backing off for now, those housing and commercial property issues are arguably going to require policy action on the macro-prudential front.”