Housing market “stupidity” to be brought back to Earth

Adam Smith 17 July 2017 NEWS

underwater house1A financial firm has predicted a slowdown for the housing market and stable interest rates for the near future.

A Deloitte Access Economics report has predicted that housing construction will continue to contract in the year ahead, The Australian has reported.

“The pace of home building is set to shrink further amid increasing evidence that gravity may soon start to catch up with stupidity in the housing markets,” Deloitte Access Economics partner Chris Richardson said.

The prediction mirrors forecasts from the Housing Industry Association, which has tipped home building to fall over the next two years.

In spite of the pullback in the property market, Deloitte predicted the Reserve Bank would remain reticent to move on the official cash rate well into next year, The Australian reported. Richardson said high levels of household debt would be likely to stay the RBA’s hand.

“Australia’s heavily indebted families are now the Reserve Bank’s problem, which is why, although interest rates will indeed rise in the next few years, they won’t rise sharply,” Richardson said.

A similar warning was issued in June by San Francisco Federal Reserve Bank president John Williams, who warned that high levels of household debt in Australia could mean severe economic shocks should the official cash rate rise.

Image: Shutterstock

Get more from finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.
Ask a question
Go to site