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Rate cut unlikely to revive house prices
Topic Started: 28 Apr 2012, 07:22 AM (4,068 Views)
zaph
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Rate cut unlikely to revive house prices

Any rate relief from the Reserve Bank next week is expected to help stabilise home prices, but a rebound may still be some way off.
Investors are currently tipping a 100 per cent chance of a 25 basis point rate cut when the Reserve Bank meets on Tuesday, which would take the cash rate to 4 per cent from its current level of 4.25 per cent.
Additionally, the market sees a 30 per cent chance of a 50 basis point cut when the RBA meets, as it responds to a slowing domestic economy.
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The vast majority of economists polled by Bloomberg - 27 out of 28 - tip a 25 basis point cut next week, while one economist, Citi’s Joshua Williamson, foresees a 50 basis point cut.
ANZ real estate economist David Cannington believes that even with two interest rate cuts, home prices will be 2.5 per cent lower at the end of 2012 than at the beginning.
“A lot is going to be driven by confidence in the housing market, which is really going to take a while to recover, especially with the weak employment growth we had in 2011,” he said.
Official RBA rate cuts will help improve affordability and confidence in the housing market, analysts agreed. House prices, have slid 4.4 per cent in the year to March, according to RP Data.


Read more: http://www.brisbanetimes.com.au/business/property/rate-cut-unlikely-to-revive-house-prices-20120427-1xpre.html#ixzz1tH47i4nZ
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NotFooled
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The Bear Whisperer

I don't know about that. There is significant latent demand in the market and many people have been holding off purchasing. With a rate cut and prices starting to trend upward again, we could see the trickle of buyers turn into a torrent.
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stinkbug
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NotFooled
28 Apr 2012, 08:20 AM
I don't know about that. There is significant latent demand in the market and many people have been holding off purchasing. With a rate cut and prices starting to trend upward again, we could see the trickle of buyers turn into a torrent.
It's hard to tell what will happen. I would have thought thought that a market in the doldrums is exactly when you would want to buy (and I recently did).

I think we probably have a few years of stagnation to get through, but it is looking increasingly as though the bottom (in nominal terms) really is in.
Edited by stinkbug, 28 Apr 2012, 09:00 AM.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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earthsta
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You two are proof that fools and their money are soon parted.
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Frank Castle
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Business As Usual

earthsta
28 Apr 2012, 09:51 AM
You two are proof that fools and their money are soon parted.
Because smart dumb people like earthsta buy when the market is booming

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A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.
WARREN E. BUFFETT
Ignore posts by The Whole Truth · View Post · End Ignoring
The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
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georgie
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You guys are guilty of tunnel vision. You need to look at the whole picture and not just Australia. Issues in Europe, China, US, the middle east are still ongoing. Even if prices currently pick up nominally you are looking at a couple of years of stagnation at best. If any international issue blows up property prices will go back down just like they did in the GFC only this time there is no government stimulus to prop them up. Even if interest rates hit 0% you can't repay a mortgage without a job and this right here is the big issue stopping people from jumping back into the market.

When you see some stability around the world then you will see property prices rise but never as fast as they did 1998-2008.
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Elastic
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2012 is the year that Spain hits the skids.
I'm not sure what response the EU is going to come up with to deal with it but the global economy is going to struggle this year as a result.
Spain's economy is much larger than Greece.
Only a rat can win a rat race.

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WestAussie
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Yer, it all went all pear shaped during the Italy and Greese blowout and we saw a fall here. Now Spain and them two again are coming up for paying back and they haven't Saved a dime. 4 options, they pay it back and don't spend over 100% which they are now rioting about due to their cuts that don't even bring them down below 120%, credit freeze. IMF pays it back - delays 3 months and credit freeze. They don't pay it back, credit freeze. Their forced austerity mesaures in place are to much and they simply leave the euro, credit freeze. Dont think anyone realises what happens in a credit freeze... Imagine there just being no money. People want to work and want to buy. But there just is zero money. You cant print more because of inflation and hyper inflation. Which never ever ends well for the govt in charge. To not have a freeze and keep it all going they would magically do something I don know what but it has to be big.
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earthsta
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Frank Castle
28 Apr 2012, 10:13 AM
Because smart dumb people like earthsta buy when the market is booming


Warren Buffett has lost billions the last few years. Have a look at the Berkshire Hathaway share price.

Furthermore, people are not fearful yet. They will be in a 5-6 more years time. That will be when it is time to buy a house.
Edited by earthsta, 28 Apr 2012, 04:23 PM.
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HSRboy
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NotFooled
28 Apr 2012, 08:20 AM
With a rate cut and prices starting to trend upward again, we could see the trickle of buyers turn into a torrent.
The only upward trend in price is for petrol, electricity, etc.

The trend for Melbourne house prices is down.
Barnaby Joyce - Indians owning Coal mines in AUS is good, Chinese owning a cotton farm in AUS is bad

Aussie Home Sales at 11-year low: http://online.wsj.com/article_email/SB10001424052702304459804577282401287187084-lMyQjAxMTAyMDEwNjExNDYyWj.html
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