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Reserve Bank Governor Michele Bullock stated that even a 20% slump in property prices would not threaten financial stability. While ANZ economists warned of a potential 15% decline, the RBA maintains that banks are well-capitalized to handle such a downturn.
Why it matters
Public confidence in the housing market and banking sector is critical for economic stability during periods of high interest rates.
Asked about bank forecasts predicting that property prices will fall as much as 15 per cent, Bullock said the Reserve Bank had done modelling which showed there was no greater risk to financial stability.
ANZ economists on Tuesday morning warned that property prices could slump by almost 15 per cent over this year and next, citing interest rates, low levels of affordability, and the federal government’s property tax changes.
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