But the RBA doesn't know if that transition - the fabled "rebalancing" of the economy - will be achieved without the need for more interest rate cuts.
The governor said he did not currently think that would be needed.
And if it is achieved, it's not known how quickly or strongly that will happen, so the timing or size of any eventual interest rate rises can't be pinned down either
News Ltd seem to think he is confused ?
http://www.news.com.au/finance/business/rba-acknowledges-the-unknowns/story-e6frfkur-1226848259048
I can help him, by selling him one of my crystal balls, predicts the future with 100% accuracy guaranteed once I have your money.
Seems he is living in reality and telling the truth, they just don't know, but either does anyone else.
Sydboy, the new norm is interest rates at 2.50%. Cannot see the cash rate returning to above 5% for the foreseeable future.
As for house prices returning to 3-4 average household income, just not going to happen. The new norm is also 6-8 average household income. In the future it will be 8-10.
In Shanghai it is more like 20-25 times the average salary. Do you hear people complain, no!
Cheers
not si sure, the employment figure release today are actually quite bad
a smoke and mirror:http://au.finance.yahoo.com/news/jobs-surge-mirage-060629184.html
I actually believe interest rate in Oz might go even lower to avoid a catastrophic unemployment effet
not si sure, the employment figure release today are actually quite bad
a smoke and mirror:http://au.finance.yahoo.com/news/jobs-surge-mirage-060629184.html
I actually believe interest rate in Oz might go even lower to avoid a catastrophic unemployment effet
Well a new bull on interest rates, Westpac's Bill Evans, has changed his mind and now thinks interest rates may rise.
He has being saying endlessly, they will continue falling.
*Hear ye Hear ye* ... to make Australia attractve on the bond rate as mining stalls as China stalls on repayments. *Hear ye Haahhahahaaaa*
Blaming global conditions no doubt !
China faces the biggest property default on record as credit curbs threaten to break the housing boom, leaving a string of "ghost towns" across the country.
The Chinese newspaper Economic Daily News said Xingrun Properties, in the coastal city of Ningbo, is on the brink of collapse with debts of $US570 million ($627.3 million), mostly owed to banks. The local government has set up a working group to contain the crisis.
The authorities are trying to wean the economy off excess credit after a $US16 trillion ($17.6 trillion) spike in loans since 2009 - equal in size to the entire US banking system - but lending curbs are beginning to expose the sheer scale of bad debt in the system.
Read more: http://www.smh.com.au/business/worl...er-collapse-20140318-34yw1.html#ixzz2wJWrGFG1
Three developers have abandoned half-built projects in the 2.5m-strong city of Yingkou, on the Liaodong peninsular
Prices have since roared back in the tier 1 cites such as Shanghai and Beijing but while these places capture the headlines, they account for just 5per cent of total building in China. Prices are falling in 43per cent of the tier 3 and 4 cities.
The yuan has fallen 2 per cent against the dollar since January
The authorities are trying to wean the economy off excess credit after a $US16 trillion ($17.6 trillion) spike in loans since 2009 - equal in size to the entire US banking system - but lending curbs are beginning to expose the sheer scale of bad debt in the system.
Read more: http://www.smh.com.au/business/world-business/china-facing-fresh-ghost-town-crisis-after-developer-collapse-20140318-34yw1.html#ixzz2wJWrGFG1
Three developers have abandoned half-built projects in the 2.5m-strong city of Yingkou, on the Liaodong peninsular
Prices have since roared back in the tier 1 cites such as Shanghai and Beijing but while these places capture the headlines, they account for just 5per cent of total building in China. Prices are falling in 43per cent of the tier 3 and 4 cities.
The yuan has fallen 2 per cent against the dollar since January
Things must be heating up when the Yanks start commenting
http://www.news.com.au/realestate/b...omist-robert-gay/story-fndban6l-1226763042194
As per CanOz friend of a friend buying up BIG in Toorak etc. there is a limit to prices and to what the market can withstand. As shares go down (read plunge) "Black Monday, 19.10.1987" for example so can the prices of property IF and it's a pretty big IF a number of factors come into play.
1) RBA lowers interest rates AGAIN
2) Unemployment rising
3) FIRB relaxation of policy (read Asian purchasing)
4) ???? ... anybody care to comment?
Meanwhile back in reality:-
http://www.abc.net.au/news/2013-11-27/apra-working-with-banks-on-lending/5119022
Number 4 ladeeez and generalmen ....
4) Lending standards (is the answer)
26th MARCH 2014 - Tread very carefully in the housing market, because rising prices and low interest rates won't last forever - that's the message for both banks and their customers.
The financial system is performing strongly, the Reserve Bank of Australia said in its twice-yearly financial stability review released on Wednesday.
But there's a catch.
The more settled environment, with its more moderate rate of credit growth, could limit the potential sources of profit growth for banks, the RBA said.
"It will be important for financial stability that banks do not respond by unduly increasing their risk appetite or relaxing their lending standards."
http://www.thebull.com.au/articles/a/44993-rba-warns-on-housing-prices.html
Hmmmmmmmm I posted the above back in November 2013.
Seems 4) is rearing it's ugly head ... only need the banks to raise their rates due to "global funding circumstances" but the RBA reckons it has got easier to get credit?
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