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RBA enormously worried about Australian house price surge, but won't admit it; House prices are popping, Sydney is going berserk
Topic Started: 26 Sep 2013, 05:04 PM (8,083 Views)
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RBA won’t admit housing headaches: ex-official

A former senior Reserve Bank of Australia official, Ric Deverell, says the central bank would be “enormously worried” about rising house prices but will not admit it.

“House prices are popping, Sydney is going berserk,” said Ric Deverell, head of global commodities, foreign exchange and Asia strategy at Credit Suisse in London and former Reserve Bank deputy head of economic research. “That will worry them enormously, although they won’t admit it,” Mr Deverell said.

“It is really difficult for the RBA at the moment. They have a positive cash rate so they can control monetary conditions but they are getting the wrong monetary conditions,” he said.

“What they would rather is have a higher or the same cash rate and a weaker exchange rate.”

“You need housing construction – it’s the big one – to come on line. The problem with that is, as we know particularly in Sydney, there are a whole lot of structural issues around the periphery, which make it difficult for that to kick in.”

…“I think the Australian dollar has to fall a lot in the next year.

“I don’t think we have to have a recession but, you know, to avoid a recession you need the exchange rate to come down substantially.”

Read more: http://www.afr.com/p/national/rba_won_admit_housing_headaches_4WcmweYEMoHmuzfvmOvkBN
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themoops
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Just put up rates, by about 3%, and blame Juliar. Problem solved.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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Massive
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themoops
26 Sep 2013, 06:31 PM
Just put up rates, by about 3%, and blame Juliar. Problem solved.
wont happen.. dollar will go through the roof..
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Veritas
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Massive
26 Sep 2013, 06:42 PM
wont happen.. dollar will go through the roof..
so would unemployment.

Rates will fall again before the year is out I reckon.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Massive
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Veritas
26 Sep 2013, 06:48 PM
so would unemployment.

Rates will fall again before the year is out I reckon.
Its becoming a bit of a run-away train scenario... and can see where feelings of concern may stem from.. the train was put in gear a few years ago and now the throttle is jammed..

the more capital that gets locked up in residential market, the less there is available to spur the economy ( jobs are lost, businesses fail etc ) , and the more pressure for increased stimulus ...
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Pig Iron
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Massive
26 Sep 2013, 07:18 PM
the more capital that gets locked up in residential market, the less there is available to spur the economy
this has already been debunked ad nauseum. captial is NOT "locked up" when the banks write a loan.
I am the love child of Tony Abbott and Pauline Hanson
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herbie
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Rock 'n a Hard Place anyone? ... :re:
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Massive
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Pig Iron
26 Sep 2013, 07:28 PM
this has already been debunked ad nauseum. captial is NOT "locked up" when the banks write a loan.
what terminology would you prefer - invested ? distributed? allocated?

no matter how you put it thats where it is - and its becoming an increasingly disproportiate part of Australia's "wealth" .. Sure, equity from property COULD be used to spur business, but who is going to do it ? investors are using that equity to speculate in -- more property ... banker lending, political policy, and the current economic climate all encourage this.
Edited by Massive, 26 Sep 2013, 07:35 PM.
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Pig Iron
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herbie
26 Sep 2013, 07:28 PM
Rock 'n a Hard Place anyone? ... :re:
something tells me this FORMER rba member is feeling left out in the cold. but how to get back in the game? i know, let's tell some journ's something shocking!
I am the love child of Tony Abbott and Pauline Hanson
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Veritas
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Pig Iron
26 Sep 2013, 07:28 PM
this has already been debunked ad nauseum. captial is NOT "locked up" when the banks write a loan.
Timmy,

Lets say we have person A and person B

Person A rents.

Person B has just taken out a hefty mortgage.

They both earn the same.

Who has more to spend on goods and services other than housing costs?

What would happen if the ratio between rents and house prices broadened?

Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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