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Wednesday, 3 August 2016

Shift in stance

Y to the sky

Last year I wrote here how the Reserve Bank of Australia (RBA) - probably tired of answering questions about Sydney house prices - subtly amended its Chart Park presentation for housing prices, switching from a linear scale to a log scale. 

In this month's Chart Pack, released today, the RBA has made another presentational shift.

Now capital city prices are not reported at all in the housing prices chart.

Instead, only the national figures are presented as year-on-year annual growth rates. 

Notably this chart now underscores the fact that macroprudential measures have taken some of the fizz out of housing finance and price growth, at the national level at least. 

Housing Prices graph

A not-so-subtle message from the Reserve on its housing market stance.

In yesterday's Monetary Policy Decision Statement, the bank noted that the risk of lower rates exacerbating housing market risks had diminished, before promptly enacting a rate cut to a record low cash rate of 1.50 per cent. 

A good sign. 

The RBA is becoming more agnostic about the level of prices, and focusing instead on getting the economy moving.