Price growth moderation allows the RBA to cut rates in 2014
It was interesting to see that dwelling values across Australia’s capital cities increased by a mild 0.1% in November which was considerably lower than the increases of 1.6% during September and 1.3% in October.
RP Data’s senior research analyst Cameron Kusher noted that the slowing rate of capital city home value growth indicated a potential moderation in overall growth.
He's among the growing band of forecasters who think it may be the case that the peak rate of value growth has now passed in Sydney and Melbourne.
Despite the headline grabbing 8% national annual growth figure, the data is actually a very mixed bag.
Sydney and Perth are the only capital city markets in which home values are now higher than they were at their previous peak.
Over the three months to November 2013, home values didn't increase in Hobart (-4.7%) and Canberra (-3.5%). They increased by 5.8% in Sydney, 1.5% in Melbourne, 1.1% in Brisbane, 2.6% in Adelaide, 2.5% in Perth and 1.8% in Darwin.
For a while this year it was the common presumption that the RBA was unlikely to cut for fear of overinflating property.
But any continued moderation of price growth will allow the Reserve Bank of Australia to cut rates again in 2014 if they have concerns on the overall economy.
It would appear, with three Saturdays to go, that the tail end of 2013 is seeing auction clearance rates finally flatlining, and more likely actually easing.
Auction results do a remarkable job in reflecting and projecting market trends.
So when auction clearance rates were on the rise, prices were generally going up too.
The opening months of 2014 will be a fascinating to watch especially the labour market which is always a lagging indicator of the economy's direction.
