Reserve Bank has shot itself in the foot and has no more ammunition left. This is because the AUD continues to fall and with this must come rate rises. If we think we are seeing mortgage payment defaults now, brace ourselves we have not seen anything yet. A fall in real estate prices of between 40 and 60 percent in a year or two would certainly not be out of the question IMO, and this will be driven by higher interest rates, mortgage defaults and a general downtrend in manufacturing accross the board. Greedy real estate agents must take a large part of the blame for this, as must the previous government for artificially propping up a real estate market that has increased the bubble many hundred fold.
