In a research note released Saturday, AMP Capital chief economist Shane Oliver provided his outlook for Australian markets in which he predicted housing finance will fall by 1 per cent.
Mr Oliver also expects unemployment to remain unchanged at 6.4 per cent while consumer confidence will “remain subdued”.
Reflecting on the key economic events of the past week, he said Australia saw a “data avalanche” with the key message being that growth remained sub-par at 0.5 per cent quarter on quarter, or 2.5 per cent year on year in the December quarter.
“On the one hand, the Australian economy has not had the recession some feared following the end of the mining boom, and non-mining activity has accelerated led by home construction with record high building approvals in January indicating that there is more to go,” Mr Oliver said.
“On the other hand, growth is clearly sub-par with mixed PMI readings and some loss of momentum in retail sales indicating that more help – from lower interest rates and a lower [Australian dollar] – is needed,” he said.
“Fortunately, inflation remains benign, according to the TD Securities Inflation Gauge, and February house price data from RP Data shows that house price gains are concentrated in Sydney with other cities seeing far more modest gains – all of which suggests that the RBA has plenty of flexibility on rates.”