Analysis: House price slump is now weighing on the economy, but is it getting worse or bottoming out?

It’s a busy week for the Reserve Bank. There’s the annual Cup Day board meeting and the release of its latest batch of forecasts in the quarterly Statement on Monetary Policy on Friday.

Busy is a relative term. Nothing much will change.

Interest rates will stay on hold at the record low of 1.5 per cent, as they have at every meeting since August 2016.

The key forecasts for GDP growth, inflation and unemployment over the foreseeable horizon will remain largely untouched. The glass will remain half-full at the RBA’s Martin Place HQ.

While a batch of data released last week may not alter the RBA’s view, it was unsettling nonetheless.

That core inflation missed the RBA’s target is almost a given these days. It’s undershot every quarter for almost three years now.

But perhaps the more subtle worry is falling house prices feeding into retail sales and ultimately consumption.

Friday’s retail sales figures were undeniably poor. Growth is now almost negligible, up just 0.2 per cent in the September quarter.

The hardest-hit sectors were in discretionary spending, particularly household goods.

External Link: Retail sales by sector Clearance rates point to a crash: analyst

This weekend’s property auction results were again pretty bleak for the sellers, but good for the few buyers who turned up.

Sydney’s preliminary clearance rate was 44 per cent compared to 60 per cent a year ago. In Melbourne only around 42 per cent of properties sold, compared to 67 per cent a year ago.

External Link: Christopher tweet

In Brisbane fewer than a third of properties up for auction sold.

Louis Christopher, head of property researcher SQM, said results like that translate into price falls of up to 3 per cent a quarter and put the market on a “crash” trajectory.

“There were

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