Once unemployment starts to rise house prices will start to drop.
The RBA may start to drop 'official' interest rates, but with wholesale funding costs continuing to climb the banks wont pass on the first couple of rate ruductions from the RBA (if they cut more than once that is). Cheap credit backed by Mortgage Securities are a thing of the past. In porevious cycles where there is a contraction in credit there is a contraction in price.
I still dont believe that whole supply/demand argument will continue to prop up property prices in Australia.
Retail sales figures have been leading indicators to recessions in previous years and with credit & inflation problems still persistant in the economy the RBA has a tough job on their hands whether to cut or not to cut.
