Australian Housing Market Seen Prone To Further Moderation Says RBA

The Reserve Bank has stated that housing prices may fall further and believes it is risky to assume they wont. It is a very dangerous idea to think that dwelling prices cannot fall, said RBA governor Glenn Stevens said in a speech today. They can, and they have.

The governor noted that (RBA) should never say a crash couldnt happen here, and the bank continues to monitor property markets and the performance of mortgages quite closely.

Home prices in Australia have fallen 5 to 10 per cent from their peak, compared with 15-20 per cent in the UK and 30 per cent in the US, according to the RBA. But even as Mr Stevens conceded further falls are possible, he said there is little evidence that a plunge in Australian house prices, like that seen in the US, UK or Spain, is inevitable.

While discouraging explanations of future home price movements that relied on domestic factors solely, Stevens linked the increase in home prices to the global debt boom which was seen through the US, UK, and Europe since in the mid-1990s. [ News Via ]

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