another extract from the previous post...link note in particular *****Our interest rates are already 3 per cent higher than in other parts of the developed world, so it would be lunacy for the RBA to raise interest rates higher. ................................................
Finally, the Reserve Bank must come to the party and drop interest rates. Talking about what will happen to buyers when interest rates go up is nonsense. Our interest rates are already 3 per cent higher than in other parts of the developed world, so it would be lunacy for the RBA to raise interest rates higher. We should not be afraid of inflation or prices rising too much. Our population is getting poorer not richer. And we would be poorer still if it were not for the stream of cheap imports coming out of Asia. If the RBA drops rates, and the banks only add a small margin (which I think is what they do) then housing prices will inevitably go up. This is a good thing for everyone. The people will become wealthier. We won't have to depend on foreigners to fund our residential development. The problem in Australia is not inflation but lack of housing. By raising interest rates we will have fewer houses, not more. In America and Britain the problem was that there was an oversupply. We have had undersupply for many years.
