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Sydney’S Hot Housing Speculators Spark Reserve Bank Alarm

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http://www.bloomberg.com/news/2014-09-16/sydney-s-hot-housing-speculators-spark-rba-alarm-at-fallout-risk.html

A 16 percent jump in Sydney home prices in the past year is sparking alarm at Australia’s central bank.

Buyers shouldn’t be overly bullish in property purchases, Reserve Bank of Australia Assistant Governor Christopher Kent said at a Bloomberg Summit in Sydney yesterday. An investor-led surge in prices may amplify any subsequent fall and risk a drop in consumer spending, hurting the economy, the bank said yesterday in minutes from its Sept. 2 board meeting.

“We’ve been at great pains to always tell people when you’re making investment decisions, make them with great care, don’t assume prices can always and will always go up,” Kent said. “And don’t always assume interest rates will stay low for the length of the loan.”

The housing market has been pumped up by the RBA keeping its benchmark interest rate at a record-low 2.5 percent for more than a year, with investors accounting for a record 49 percent of new home loans in July. Demand for high-risk mortgages, including interest-only loans, is setting the stage for a jump in mortgage delinquencies when interest rates rise, Moody’s Investors Service said this month.

“This is the first time we have seen the bank show genuine alarm at the recent lift in house prices,” Westpac Banking Corp. Chief Economist Bill Evans said in a research note.

House prices are critical to powering the global economy!!!

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Debt is manufactured from nothing, house values are therefore manufactured from nothing....hence we all some of us become rich from nothing. ;)

Corrected. :P

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Unlimited central bank QE = worldwide yield compression to zero. Without a positive carry the only way to keep the financial system upright is with helicopters and wheelbarrows.

It's coming!

Gold-divisible-bars.jpg

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House prices ARE the Australian economy. Nothing else exists. The treasurer says this is good as it will stimulate jobs via new building (even though real people are now locked out). They said housing would take over when mining drops off, but what they meant was house 'prices' not building. They restrict land and the banks lend enormous sums to any being with half a pulse (sound familiar?) Mega blocks of tiny flats are being built for Chinese speculators to buy and hold, not use much or rent out. The place is insane.

Worse than the UK on account of that even in places with no jobs and little pay, prices are 10x the local wages (of those who actualy do have full time jobs that is.

Edited by steve99

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Article says

''The housing market has been pumped up by the RBA keeping its benchmark interest rate at a record-low 2.5 percent for more than a year, with investors accounting for a record 49 percent of new home loans in July. Demand for high-risk mortgages, including interest-only loans, is setting the stage for a jump in mortgage delinquencies when interest rates rise, Moody’s Investors Service said this month.''

''mortgage delinquencies when interest rates rise''

as per UK and USA interest rates will only rise when wages outstrip real inflation. We are a long way off that.

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