House price dips 'show slowing economy'

A larger-than-expected fall in house prices in the September quarter suggests that the economy may slow more sharply than originally anticipated, economists say.

House prices backpedalled 1.8 per cent in the September quarter, according to the
Australian Bureau of Statistics' (ABS) house price index.
It was the index's second consecutive quarterly fall and much worse than market
expectations of an 0.5 per cent decline.
ICAP senior economist Adam Carr said the house price data, plus the similarly weak
ANZ job advertisements survey for October and September retail sales, pointed to an
ongoing deterioration in the economy.
"Perhaps more sharply than originally anticipated," he said.
"It's an ill omen to see a 1.8 per cent fall this early on - before the unemployment
rate has risen."
Only two of Australia's eight capital cities - Hobart (up 0.7 per cent) and Darwin
(up 0.1 per cent) - defied the national trend to record house price increases in the
September quarter.
The largest falls were in Brisbane (-3.3 per cent) and Canberra (-2.5 per cent),
while house prices in Australia's two biggest cities, Sydney and Melbourne, slipped
1.8 per cent and 1.9 per cent respectively.
JP Morgan economist Helen Kevans said house prices were expected to fall 10 per cent
over the next year.
"Larger falls in house prices could be warranted, although the acute shortage of new
homes and accelerating population growth (on the back of higher skilled migration)
will keep upside pressure on house prices," Ms Kevans said.
Housing Industry Association chief executive (policy) Chris Lamont said the
September quarter figures reflected the slowing Australian economy.
But he said the result was a far cry from the 40 per cent fall in house prices some
commentators were predicting just weeks ago.
ANZ economist Alex Joiner said a chronic shortage of housing should shield the
market from significant falls.
But a weaker-than-expected economy and any significant rise in the unemployment rate
could pose a further downside risks to house prices.
The Reserve Bank of Australia (RBA) has lowered the cash rate from a 12-year high of
7.25 per cent in August to six per cent.
Economists expect a further cut of 50 basis points at Tuesday's RBA monthly board
meeting.