ANZ Chief Economist Says US Debt Is the Biggest Concern, with Australia Potentially Facing Just One More Rate Hike — Sydney Auction Clearance Rate at 54%

Weekly Market Focus

ANZ Chief Economist Richard Yetsenga believes another global financial crisis (GFC) similar to the one in 2008 is unlikely over the next 12 months, as the global financial system no longer faces the same level of interconnected private-sector risks. His greater concern is the state of US public finances.

US net public debt has reached around 100% of GDP, compared with approximately 32% in Australia. Investor concerns about rising US debt and the outlook for inflation are pushing US Treasury yields higher. Yetsenga believes the current US fiscal trajectory is unsustainable, while tariffs could weaken economic performance over time by driving up the cost of goods.

On Australia, Yetsenga takes a less pessimistic view than some market commentary suggests. Australia remains one of the world’s wealthiest economies, and its labour market has remained broadly resilient. However, younger Australians, first-home buyers and people looking to start families are facing considerably greater financial pressure.

Australian house prices have risen by an average of around 6.5% a year over the past 30 years, outpacing income growth and worsening housing affordability. While recent price falls have attracted attention, Yetsenga noted that, on average, they amount to giving back only around six months of the market’s typical gains over that period. He supports addressing housing affordability through measures that increase supply and adjust investment demand.

On interest rates, Yetsenga considers suggestions that the cash rate could reach 10% unrealistic. He expects the Reserve Bank of Australia may need to raise rates just once more over the next 12 months, before slower economic growth and easing inflation bring the current tightening cycle to an end. He also sees the possibility of modest rate cuts in 18 to 24 months.

Asked about One Nation’s proposal to allow more Australians to access their superannuation, Yetsenga did not offer a definitive assessment of the policy in isolation, instead emphasising the need to consider it as part of a broader policy package. He noted that Australia’s substantial superannuation system has become an important force in global capital markets, making any changes to its structure a matter that requires careful consideration.

Last Week’s Auction Results

Sydney: A total of 706 properties were taken to auction, with results reported for 422 properties. Of these, 226 were sold, resulting in a 54% clearance rate. The total auction value reached AUD 212,507,376, with a median sale price of AUD 1,590,000.

Melbourne: A total of 768 properties were taken to auction, with results reported for 533 properties. Of these, 333 were sold, resulting in a 62% clearance rate. The total auction value reached AUD 235,101,100, with a median sale price of AUD 970,000.