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RBA May Add Fuel to Australia’s Housing Bubble

Sydneysiders wanting to sell their homes have never had it easier.  The proportion of successful house auctions in Australia’s largest city was above 80% at the weekend for the fourth week in a row. That is the longest stretch on record and highlights the potential consequences of a projected interest-rate cut.

Governor Glenn Stevens’s effort to revive business investment with cheap finance is adding fuel to the country’s biggest property market. Home sellers may get a further boost, with 18 of 29 economists forecasting a 25-basis-point cash rate reduction on Tuesday.

Unlike in the U.S., where auctions are frequently used to dispose of distressed properties, sellers in Australia try them when the market is strengthening. In Sydney, 82.8% of homes put up for auction on Feb. 28 were sold, according to CoreLogic RP Data.

Bloomberg [1]

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