This week will be a mixed bag for the housing market and economy if predictions from one senior economist are correct.
A “bounce in new home sales” is expected to be the result on Tuesday this week, however “continued softness in credit” will be seen on Wednesday, AMP Capital’s chief economist, Shane Oliver, noted in his weekly economic and market update.
He also points to a “slight fall in building approvals” also being noted on Wednesday, along with a “slight fall in house prices in October” being released on Thursday.
This will all be followed up by “relatively benign producer price inflation” on Friday.
“A speech by RBA Deputy Governor Lowe (Tuesday) will be watched for clues on future interest rate moves,” Mr Oliver noted.
“While the upside surprise in inflation has made a rate cut next month a more marginal call, we think the RBA should and will cut on Melbourne Cup Day … If the RBA wants to be confident non-mining demand will pick up enough to offset the slowdown in the mining sector, then interest rates will need to be cut further.”
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