Commodity boom or not, the housing market is about to get pummelled. And whichever government is in power will be powerless to stop it. The RBA has no choice but to raise rates several times from here. Most mug punters, (and in fact most so called experts) underestimate what interest rates (aka the cost of money) does to asset prices, especially property. The few perceptive ones out there know how dire the situation is, with the cost of money about to head much higher. A 100 basis point lift in rates would take them to late 2019 levels and is likely to undo all the property gains in the last three years. A 150 basis point lift in rates would take them back to 2017 levels… and a 250 basis point lift, which Governor Lowe said last week is possible if need be to get inflation under control, would have them at 2014 levels… anyone remember where house prices were back then?
