the aussie property bubble is about to pop., page-6

Mangrove, there are more components to the economy and to inflation than houses and units. Even though house and unit inflation has gone through the roof, inflation in most other goods and services in Australia is very flat or even under negative pressure especially with the rising dollar.

I believe the latest rate rise by the RBA was unwarranted, and is already having damaging effects on Australian export businesses and the stock market. Not only this, it is having a deflationary effect upon the wider economy, which is something which we (and the US) have been trying to escape from from for a while. All large businesses and big co.s on the ASX suffer from the lack of pricing power that disinflation brings. All this for the narrow reason of cooling down housing prices. The resulting reduced debt levels will also choke off demand growth to add to our deflation concerns.

I think the inflation in housing is very much due to these "speculative" real estate traders with easy access to credit. These spec traders jam prices up to overinflated levels in the same way as happens with popular shares in the stock market.

As with popular sharemarket stocks when the day traders/spec buyers decide to abandon ship the price readjusts significantly.

They should have left rates put and let these speculative home unit traders learn the hard way. There are obviously effects on the construction industry but I think they are trying to adjust already.


Just an opinion


Cheers

Christian