PHOTO: RBA governor Philip Lowe. The Bank has kept its overnight interest rate at a record low of 1.5 per cent since August 3, 2016.
Sydney’s plunging house prices are usurping a prolonged wage slump as the key worry for the central bank, with markets now showing more chance of an interest-rate cut than a hike in 2019.
Prices in Australia’s biggest city have tumbled 10 per cent and some economists are tipping a similar fall next year.
While the central bank isn’t panicking just yet, a 15 per cent nationwide drop in prices would cut about $1 trillion ($US718 billion) from the housing stock value. That could deal a major blow to consumption, which props up about 60 per cent of the economy.
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