The Reserve Bank of Australia’s humiliation over its housing calls must be starting to hurt.
The index it was relying on to justify repeated claims housing conditions were cooling—and that its August and May rate cuts would not reignite another round of aggressive price growth—has reported stunning capital gains across the nation’s largest cities.
…CoreLogic’s index, which is published daily rather than quarterly and uses a “hedonic regression” method in contrast to APM’s simpler “stratified median” approach, signalled that Sydney, Canberra, and Melbourne dwelling values had jumped by 3.5 per cent, 4.5 per cent and 5.0 per cent over the September quarter.
Year on year growth of 3.5% is hardly humiliation. The CoreLogic index Chris helped created remains under a cloud:
And a large divergence in Sydney:
I’ve no doubt that some areas are going up. Melbourne is overheated. My own area is mental. And were I in charge, I’d still be tightening macroprudential. But in aggregate the Domain numbers will give the RBA only a little pause.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
