In a report released yesterday by Standards & Poor’s, it predicted Australian House Prices could fall by more than 5 percent in 2012 should China experience a soft landing with a GDP growth rate of 8 percent.
Earlier this week China’s Premier Wen Jiabao announced his government would target a GDP growth rate of 7.5 percent in 2012. In China’s 12th five year plan, it has lowered growth to 7 percent during the 2011-2015 period to what S&P term a medium landing.
Other scenario’s tabled in the S&P report was a house price fall of greater than 10 percent if China’s GDP growth was 7 percent and a collapse exceeding 20 percent if China experiences a hard landing with GDP growth falling to 5 percent.
With the Australian banking sector having a large exposure to residential house prices, the report titled “China Soft Landing Would Moderately Impact Australia’s Housing Market” was one of three reports released on Wednesday. S&P is also focusing closely on the RMBS and LMI providers with reports titled “Australian LMI Providers Likely To Stand Firm Amid China Jitters” & “A Soft Landing In China Is Unlikely To Affect Australian RMBS”
» Lower GDP target is healthier – China Daily, 9th March 2012.
» China drop to hit house prices hard – The Age, 9th March 2012.
» S&P Articles Analyze Impact Of China Slowdown On Aust Sectors – Reuters, 7th March 2012.
Posted in Australian Economy, Australian Housing, China | 23 Comments »