Australian house prices dive in September quarter
3rd Nov 08, 5:41pm
House prices in Australia's eight biggest cities slumped 1.8% in the September quarter from the June quarter, including a 3.3% fall in Brisbane, figures from the Australian Bureau of Statistics show. Prices fell a revised 0.2% in the June quarter and are up 2.8% from the September quarter a year ago. What I think it means This Australian house price data is worth watching closely, particularly by those in New Zealand worried about the health of the import-buying Australian consumer and the stability of the Australian banking system. There's no doubt many a New Zealander with property in Australia too. By most measures, Australian house prices are just as over-valued as New Zealand house prices, but most observers have been confident there would not be a slump there because the economy remained strong. House prices had also held up for longer than house prices in New Zealand, which began falling in January and are down 5-10% from their peak, depending on the measure used. But the initial signs are that Australian business and consumer confidence have weakened sharply and the slide in commodity prices is hurting sentiment too. That's why the Reserve Bank cut its official cash rate by 100 basis points and is expected to cut again tomorrow by 50 basis points. If house prices and Australian disposable incomes (after mortgage payments) dive in tandem as you'd expect, that will hurt New Zealand's export growth to its largest market and force the Australian-owned banks that dominate here to pull in their horns even more.