"Personally, I do not believe the Reserve needs to lift rates at present. Doing so would accelerate the decreases in house prices and potentially put many first-home buyers who bought in 2009 and 2010 into negative equity - a situation in which the owner owes more money on the property than it is worth."
Should the reserve bank base it's decisions on (in some cases) stupid decisions made by first home buyers lured into taking the bait from the vote hungry government, who also made a stupid decision to give you cash if you bought an existing residence? Sure they might base it on the repercussions that a property crash may create, but investing and buying assets is not underwritten by the charity of taxpayers. Inflation is a greater threat than collapsed house prices IMO, looking at previous economies that have had inflation/wage breakout problems, including Australia, when 17% rates were experienced briefly.
