Sydney's Property Plunge Will Be the Central Bank's Biggest Worry
- Further erosion of home values could deal blow to consumption
- Wages slowly rising, but still plenty of slack in jobs market
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Sydney’s plunging house prices are usurping a prolonged wage slump as the key worry for the central bank, with markets now showing more chance of an interest-rate cut than a hike in 2019.
Prices in Australia’s biggest city have tumbled 10 percent and some economists are tipping a similar fall next year. While the central bank isn’t panicking just yet, a 15 percent nationwide drop in prices would cut about A$1 trillion ($720 billion) from the housing stock value. That could deal a major blow to consumption, which props up about 60 percent of the economy.