Economics
Australia Growth to Be Hit by Housing ‘Perfect Storm,’ AMP Says
- Sydney and Melbourne prices to fall a total of 20%: Oliver
- RBA to cut cash rate to 1% by end-2019 to support households
Photographer: Brendon Thorne/Bloomberg
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Australia’s tumbling property prices could shave up to 1.2 percentage points from economic growth in 2019 as the decline hits housing construction and consumer spending, according to AMP Capital Investors Ltd.
Sydney and Melbourne prices will drop a further 10 percent next year, taking their peak-to-trough fall to 20 percent as a “perfect storm” smacks housing, AMP Chief Economist Shane Oliver said in a research report Wednesday. He predicts the Reserve Bank of Australia will cut interest rates in the second half of 2019 and end the year with a cash rate at 1 percent from the current 1.5 percent.