HSBC said a weak Australian housing market will drag on growth and aid the Reserve Bank of Australia’s efforts to return inflation to the 2–3% target range. In a Thursday research note, Paul Bloxham said the property downturn cools the economy via several channels, with the negative wealth effect most significant; a 5% fall in house prices typically reduces consumer spending by about 0.8% over two years. RBA Governor Bullock has said the three rate hikes from February to May were intended to slo

HSBC said a weak Australian housing market will drag on growth and aid the Reserve Bank of Australia’s efforts to return inflation to the 2–3% target range. In a Thursday research note, Paul Bloxham said the property downturn cools the economy via several channels, with the negative wealth effect most significant; a 5% fall in house prices typically reduces consumer spending by about 0.8% over two years. RBA Governor Bullock has said the three rate hikes from February to May were intended to slow growth to ease price pressures. Economists and traders see the RBA as capable of another hike as soon as the end of this month, potentially lifting the cash rate to 4.6% and exerting further downward pressure on house prices.