Melbourne and Sydney has witnessed substantial property price falls in November as auction clearance rates took a tumble.
According to CoreLogic RP Data, Melbourne property prices fell a sizeable 3.5 per cent in November, followed by Sydney notching up a 1.4 per cent decline for the month. Australia’s two largest property markets sent the Australian index of prices in the eight capital cities down 1.5 per cent.
As we reported back in May, (“Passive foreign investment watchdog relieved of enforcement duties“) and September (“Residential property worth over $1 billion now under investigation by Foreign Investment taskforce“) new laws on Foreign investment come into force today.
In response to a question about the cash rate raised last week at the Australian Business Economists (ABE) Annual Dinner, RBA governor said “We’ve got Christmas. We should just chill out, come back and see what the data says.”
True to his word, the Reserve Bank chilled out today leaving the official cash rate on hold at 2 per cent.
Some of the data Stevens refers to has been weak.
Last Thursday, the Australian Bureau of Statistics released business investment spending for the September quarter down 9.2 per cent. The annual result was a 20 per cent fall. The quarterly figure was the worst on record for the 28 year-old survey, with CAPEX down across the board, not just mining. Building and construction was down 9.8 per cent, and services and hospitality down 10 per cent. There had been hope, the services sector would pick up some of the slack from the mining downturn.
Market Economics managing director Stephen Koukoulas told the ABC, the figures were “horrid.”
“Across the board, it is pretty grim and there’s no evidence that a pick-up in business confidence has translated into business investment,”
Stevens concluded his ABE annual dinner speech with what he called “My final, fairly uncontroversial predictions:”
The business cycle will continue. There will be economic downturns from time to time. If one of those turns out to be a big one, it will be very new experience for quite a lot of Australians. Close to half the workforce has never seen really high, nationwide unemployment. A lot of people in business have, I suspect, not seen how tough conditions can become when virtually every industry and region is contracting. That they have not seen this is a good thing – in the sense that it results from the fact that we have not a really serious downturn for a long time now. But if one comes, it will be a shock.
» RBA’s Glenn Stevens planning on a ‘chill out’ Christmas despite nit-pickers – The Sydney Morning Herald, 26th November 2015.
» Business investment spending down 20 per cent, ‘grim’ across all sectors – The ABC, 26th November 2015.