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Friday 2 December 2022

Stop hiking rates! (HIA)

New home sales crash

The HIA has warned on multiple occasions that Australia is heading for a catastrophic housing shortage.

New home sales have been obliterated over recent months to sit at levels even lower than the worst of the pandemic lows.

Today's lending indicators data from the ABS added to the growing sense of alarm.

Chief Economist Tim Reardon warned today that lending for new housing has dropped to multi-year lows, just as immigration begins to ramp up: 

Source: HIA

Most economists still believe that the Reserve Bank will hike in December anyway, although Gareth Aird of CBA believes that will be the final hike of the cycle.

Aird argues that the Reserve Bank is "flying blind" because the last few rate hikes haven't yet begun to hit home given the lag between rate hikes and increases in schedule mortgage payments. 


Bond yields are moving in that direction.

Australia's 3-year bond yield dropped to under 3 per cent today, having been at 3.8 per cent in September.