I appreciate foreign investment drives a high degree of purposeful growth in this country nqcowboy, especially on the South-Eastern seaboard, and that largely this is highly beneficial. The pressure of interest rates is also less acute now, than a decade ago.
I expect the RBA's concern is that lots of successful sub-35 year olds would not remember the severity of, and high percentile losses of the property shakeout from the end of 1989 through 1992, and are over extending themselves horribly if a recession sets in. Their consumer spending would dry up fast as they experienced negative equity, which the RBA wants to avoid, the huge service industry here would suffer..... Note the near bankruptcy of United Airlines in the States, as demand for air travel there experiences the greatest ever downturn, on the back of shrinking wealth..
Australian investment property prices crashed severely in the early 1990s, especially in the areas of highest percentile rise. Clearance rates plummeted towards 35% as properties lost 5K to 10K, week after grinding week in Sydney, from 1990 through to 1991. ... Lord knowns the Real Estate industry will not be reminding current buyers ..
It endangers future consumer spending greatly if indiscriminate property speculation extends in a dot.com mania on margin, into an unsustainable parabolic excess. Even a single year of deflation, as now already seen extending in the US auto industry, could bring this down.
