Heat will come out of the housing market in mid-2022: Westpac's Bill Evans

The level of uncertainty is high and the prospect of four years of holding the cash rate near zero presents real risks for asset markets, Bill Evans, the Westpac chief economist said
Heat will come out of the housing market in mid-2022: Westpac's Bill Evans
Jonathan ChancellorSeptember 27, 2021
Westpac expect that the heat will be coming out of the housing market from the middle of next year, as the prospect of the first rate hike remains years off. The comments came from Westpac's chief economist Bill Evans ahead of the October RBA board meeting. The RBA board noted housing prices are continuing to rise, although turnover in some markets had declined following the virus outbreak. "Housing credit growth has picked up due to stronger demand for credit by both owner-occupiers and investors," the RBA governor Dr Philip Lowe said. Lowe noted the Council of Financial Regulators has been discussing the medium-term risks to macroeconomic stability of rapid credit growth at a time of historically low interest rates. "In this environment, it is important that lending standards are maintained and that loan serviceability buffers are appropriate.becomes apparent," Lowe said. After the meeting, Bill Evans noted there were no policy changes announced or much change in the governor's statement. "He did make us aware that the Council of Financial Regulators is closer to adopting some form of macro prudential tightening with loan serviceability buffers being singled out," Evans noted. "There was clearly a discussion about the prospect for macro prudential policy with the only “clue” being a consideration of loan serviceability buffers," he said. Westpac's expectation is that an increase in the overnight cash rate of 0.15% can be expected by the March quarter 2023. The ANZ advised more on the RBA’s concerns around housing will come on Friday with the release of the bi-annual Financial Stability Review.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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