Australia: Housing angst helping cap AUD – AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, explains that the housing market in Australia appears to be very strong and might be seen as a reason for higher AUD; generating wealth and confidence and preventing the RBA from cutting rates further. 

Key Quotes

“However, rapid house price growth is creating more angst over affordability concerns.  Combined with high levels of household debt, it may be dampening consumer confidence and consumer spending.  (Retail sales growth fell to a low since 2013).  The housing market looks increasingly risky as regulatory scrutiny over lending increases, mortgage rates creep higher, tax concessions are expected to be reduced in the May budget, and growing supply of apartments comes on the market.  The recent surge in investor demand may reflect a rush to get in ahead of tighter credit conditions and tax changes.  If so, the housing market may slow later this year and in any case, represents a bigger risk to the Australian economy.”