House prices!
The Australian Bureau of Statistics will release the official measure of house prices for the March quarter next week and they will be cut and diced for clues about the heat or otherwise in the housing market. It is likely that the data will show a cooling in house price growth in Sydney and Melbourne, but further falls in Perth and Darwin. The other cities are expected to record moderate growth.
There are a range of other private sector measures of house prices. These have an advantage of being more up to date than the ABS measure and while there are some differences in methodology and timing, as the chart shows, the broad trends, turning points and overall changes in price are remarkably similar.
The key point for next week is whether a cooling in house prices in underway and if it is, how much more price moderation will be needed before the RBA can get the confidence to consider an interest rate cut given the low inflation, weak growth dynamics prevailing at the moment.
