Please click the link below to read Shane Oliver's views on the falling home prices in Australia, and how bad it could get.
Main points raised are:
- Australian home prices are likely to fall another 5-10% this year driven by a further 15% or so fall in Sydney and Melbourne.
- Tight credit, rising supply and falling price expectations are the main drivers.
- Uncertainty around the impact of possible tax changes is likely to impact investor demand.
- The housing downturn will be a significant constraint on Australian growth.
- We expect the RBA to cut the official cash rate to 1% this year.