the aussie property bubble is about to pop., page-7

Thanks for your comments, Christian,

I had a horrible feeling that the Government had takes House Prices as such, out of the CPI and put in, instead, House Payments.

As interest rates fell, the house payments fell and the rate of inflation appeared to be fine. People borrowed more as their capacity to borrow increased through falling borrowing costs. And then there were the property speculators driving the market.

But this manipulation of the CPI will now collapse on itself. As interest rates increase housing paymants, this will increase the cost of living and the CPI. The Reserve Bank will have to increase interest rates to stop inflation which is being caused by interest rate increases. And the same cycle will start again. It will only be stopped by a complete collapse of the economy or fiddling the figures again.

A society which tries to prosper by selling inflated Housing to it's children is doomed to failure. The only way they can pay for them is through wage rises, then everyone looses.

The Reserve Bank has been derelect in it's duty to stop this bubble. The pain this will cause is immense and there is no long term gain.