We have seen what interest rate increases do to Ireland in 2008, UK in the 90s.
Go and look and the RBAs balance sheet in the last two years. That Gravy train is coming to an abrupt halt. So all this talk about rotation is a lot of rubbish.
Medium salary in Australia is $70k, so borrowing 6 times salary equals $420k. Not anywhere near a price of a property.
It’s all cheap debt. Living through the Irish recession It’s all dejavu. It starts with everyone wanting to get on the gravy train and fomo of buying houses. Prices rise and people take out the big cars, designer dresses etc on the back of the equity. Some give up their jobs or work on reduced hours. Everyone wants to work in construction. We are told property only rises and there is so much demand to one here for migrants. Ireland is the land of opportunity and receives positive migration after decades.
Then we get a shock when Interest rates rise, prices begin to slow and then fall, people panic. Demand for construction halts, some are out of work or working on reduced fees. mortgages aren’t met through being jobless or not being able to pay increased interest. Investors sell as no rents yield in Australia.(at least Ireland had rental yields) Creates an oversupply of housing and markets continue to collapse bringing banks with them. It’s not pretty
