While easing this year has been modest following a period of strong growth, the median price of a home in Australia in June<\/a> was only $6000 higher than in February, with annual growth having dropped from 9.1% to 5.8%, the Home Price Index shows.<\/p>\n Ms Bullock acknowledged price declines had been largely concentrated in the Sydney and Melbourne markets, where prices in June were down 0.5% and 0.4% in the cities respectively.<\/p>\n Home values are falling in Australia’s priciest city. Picture: Getty<\/p>\n Despite, this the RBA is confident households can hold on through the bumpiest year since Covid.<\/p>\n \u201cOur estimates suggest only a small share of borrowers are facing difficulty with their loan repayments,\u201d Ms Bullock said. \u201cIt indicates financial stability risks are contained and borrowers in aggregate have built up considerable savings buffers over the years.\u201d<\/p>\n While the bank expects housing prices to be affected when interest rates rise, Ms Bullock reiterated her long-held argument that monetary policy does not target housing prices.<\/p>\n \u201cRather, what matters for monetary policy is how changes in housing prices affect household spending, investment decisions and inflation,\u201d she said.<\/p>\n The RBA is closely watching spending and investment decisions. Picture: Getty<\/p>\n As the RBA\u2019s monetary policy board prepares to hand down the next interest rate decision in two weeks\u2019 time, forecasting is continuing to prove challenging.<\/p>\n The labour market has eased more<\/a> than the Reserve Bank expected over recent months, and Ms Bullock also noted the unemployment rate has risen \u201csomewhat more\u201d than predictions.<\/p>\n \u201cFive months have passed since the conflict began and while there are now some signs of the impact on inflation activity, conditions can change quickly,\u201d she said.<\/p>\n \u201cThe key question in the period ahead is whether the tightening in monetary policy earlier in the year is sufficient.\u201d<\/p>\n Reserve Bank of Australia governor Michele Bullock says the housing market is weaker than the bank had expected it to be. Picture: Oliver Contreras \/ AFP<\/p>\n<\/p>\n
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