Talking Points:
- Australia’s 4Q house prices figure beat both quarterly and yearly expectations
- RBA generally cautious of home prices with regards to inflation
- Housing inflation has contributed to dual views of owner wealth and fear of housing bubbles
Find how retail traders are positioning in the AUD/USD with DailyFX SSI
The Australian house price indexes for the fourth quarter beat their estimates today, coming in at 0.2 percent quarter over quarter (QoQ) versus 0.0 percent expected and 8.7 percent year over year (YoY) against an 8.5 percent forecast. That said, both were notable downgrades to the previous quarter’s pace of 2.0 and 10.7 percent respectively. House prices in Sydney grew nearly 14 percent YoY alone, followed by Melbourne at 9.6 percent. The AUD/USD was little moved by the data.
The better-than-expected release of housing prices comes after a cautionary RBA rate decision, where the previous year’s growth was followed by indications of moderation in 2016. House price growth in Sydney and Melbourne was lower than the prior years but rose modestly through 2015. The increase in home prices in smaller cities continued to disappoint, and the growth in the overall figure continues to be mostly supported by the major cities.
In its recent meeting minutes, the RBA affirmed its inflation outlook to be relatively slow in the medium term, as global inflation growth remains low. Housing as a factor of CPI contributed 0.1 percent MoM, and 2.2 percent YoY, being the 4th largest contributor of inflation in Australia. Although the latest numbers are unlikely to indicate any serious inflation pressure, a strong house price index may bend the view of be a positive indicator of consumer prices and concern for financing health in the months and quarters to come.
DECEMBER KEY FIGURES
| Sep Qtr 15 to Dec Qtr 15 | Dec Qtr 14 to Dec Qtr 15 | |
|---|---|---|
| RESIDENTIAL PROPERTY PRICES | % change | % change |
| Weighted average of eight capital cities | 0.2% | 8.7% |
| Sydney | -1.6% | 13.9% |
| Melbourne | 1.6% | 9.6% |
| Brisbane | 1.6% | 4.2% |
| Adelaide | 0.9% | 3.3% |
| Perth | 0.5% | -2.9% |
| Hobart | 2.5% | 3.5% |
| Darwin | -1.8% | -3.2% |
| Canberra | 2.8% | 6.0% |
(Data: Australian Bureau of Statistics)
