Falling house prices are the point, not the problem
Falling property prices may be easing speculative excess, but with inflation still above target, a housing downturn alone is unlikely to convince the RBA to cut rates.
Property price falls nationally are still largely concentrated on the more expensive market segments. (Image source: Lisa Parry)
Australia’s housing market has turned. After several years in which the dominant question was how much further prices could rise, attention has shifted to how far they might fall and whether falling prices will eventually force the Reserve Bank of Australia (RBA) to cut interest rates.
That last assumption deserves more scrutiny than it is getting.
Housing matters enormously to Australian households and to the economy. But the RBA does not have a…
