RBA predicted almost no house price declines when it hiked rates, but now expects biggest declines ever…Article by Chris Joye

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In a fascinatingRBA freedom of information disclosuredumped on Friday, which references Coolabah’s house price analysis/forecasts (including work published here on Livewire), the Australian central bank reveals how it once again got its house price expectations wrong–and then radically downgraded them.

The massive shift in the RBA’s house price outlook almost certainly has implications for how high it needs to lift its cash rate: it has gone from predicting almost no house price declines to what would be–in its own words–the biggest draw-down in history.

Recall thatback in October 2021we argued that after the RBA lifted its cash rate by at least 100 basis points, national house prices would fall by 15-25%. No other mainstream analysts were forecasting material house price declines at the time.

Our contrarian views were partly predicted on the insights afforded by the RBA’s key internal housing model, developed by Trent Saunders and…

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APRA Chair Wayne Byres – Speech to FINSIA ‘In conversation with Wayne Byres’ event | APRA

Hello Monday

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Housing

Another constant feature of my time has been that Australian obsession: housing.

Perhaps the most frequent statement I have made in my time as Chair has been that APRA does not have a mandate to control housing prices – so I may as well make it one last time.

APRA’s interest in housing stems from our job to protect bank depositors – who provide the funds that banks lend for housing – and from seeking to promote overall financial system stability. We do that through ensuring bank balance sheets are sound and lending standards are appropriate. Incidentally, that benefits borrowers (by limiting their capacity to overextend themselves) and impacts housing prices (through influencing the demand curve for housing) but both of those are indirect consequences of our core tasks: they are not our goals.

As ever lower interest rates drove the housing cycle upwards, APRA sought to ensure competitive…

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Growth Conditions across Brisbane 20-10-2022

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• Thecombined value of residential real estatein Australia fell to $9.6 trillion at the end of September, down from $9.7 trillion in the previous month.
• Dwelling valuesacross Australia are 1.7% higher than they were this time last year, down significantly from a cyclical peak of 22.4% recorded in the 12 months to January 2022.
• While the housing market downswing has become more broad-based, themonthly rate of declineslowed to -1.4% in September, from -1.6% through August.
• Thehighest annual growth ratein dwelling values among the regional and capital city dwelling markets was across Regional SA, at 22.2%. The lowest rate of change in values was across Sydney, down -6.0% over the year.
• Therolling 28-day changein the combined capitals home value index fell a further
  -1.3%through the 28 days ending September 30th.

• Sales volumesare trending lower as buyer demand slows. CoreLogic estimates that in…

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