The Reserve Bank has issued a chilling warning about the effect of plummeting house prices on the Australian economy.
Sharp real estate value falls in Sydney and Melbourne are worrying Australia's central bankers, who fear it could push up unemployment.
Minutes from the Reserve Bank of Australia's February meeting, released on Tuesday, hinted that tumbling property prices will hit consumer spending.
The Reserve Bank has issued a chilling warning about the effect of plummeting house prices on the Australian economy (Sydney Harbour from Kirribilli on the lower North Shore pictured)
'The likely effect of lower housing prices and reduced housing market activity on consumption, warranted a downward revision to the outlook for consumption,' they said.
Sydney's median house price has plunged by a record 13.7 per cent since peaking in July 2017, following an Australian Prudential Regulation Authority crackdown on investor loans.
During the past year alone, prices for homes with backyards in Australia's biggest city have plummeted by 10.9 per cent, with Melbourne's equivalent values dropping by 10.6 per cent, CoreLogic data showed.
The Reserve Bank feared a sharper drop in house prices would push up unemployment, from its present level of five per cent.
Sharp real estate value falls in Sydney and Melbourne are worrying Australia's central bankers, who fear it could push up unemployment (Centrelink queue pictured)
'Members observed that if prices were to fall much further, consumption could be weaker than forecast, which would result in lower GDP growth, higher unemployment and lower inflation than forecast,' it said.
Sydney, down 10.9% to $902,786
Melbourne, down 10.6% to $740,425
Brisbane, up 0.1% to $540,750
Adelaide, up 0.9% to $464,584
Perth, down 5.3% to $465,120
Hobart, up 7% to $494,810
Darwin, up 2.3% to $502,023
Canberra, up 4.3% to $668,469
Source: CoreLogic detached median house prices in year to January 31
ANZ is forecasting house price drops of 20 per cent, from
