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Increased Housing Stresses Could Pressure Rates

AUSTRALIA

Housing costs continue to be elevated with June CoreLogic capital city house prices rising 0.7% m/m and 8.6% y/y and May rents up 7.4% y/y. The housing market in Australia remains very tight with a supply shortage and working-age population growth just under 3%y/y and little immediate prospect of an improvement in fundamentals. The RBA noted in June that there has “been an increase in wealth, driven by housing prices”. While it doesn’t target housing, it is worth monitoring indicators as it has become an issue for the central bank.

Housing costs y/y%

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Housing costs continue to be elevated with June CoreLogic capital city house prices rising 0.7% m/m and 8.6% y/y and May rents up 7.4% y/y. The housing market in Australia remains very tight with a supply shortage and working-age population growth just under 3%y/y and little immediate prospect of an improvement in fundamentals. The RBA noted in June that there has “been an increase in wealth, driven by housing prices”. While it doesn’t target housing, it is worth monitoring indicators as it has become an issue for the central bank.

Housing costs y/y%

Keep reading...Show less