Hmmmm, but in a way inflation should represent the broader economy??? So one strong market (housing) might not have the power to shift inflation sufficiently to require intervention. Thats the perspective I'm coming from - would be interested in views about how much the hosuing market can move inflation on its own.
Interest Rates Will Not Rise Anytime Soon
- Thread starter grand dad
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It wouldn't just be inflation... though rising house prices (which would invariably see home loan repayments and rents rise too) combined with more asset backed lending (equity maaate) ---> inflationary.
It's financial stability and the flipside of rampant "asset price inflation" (central bank code for "rapidly rising house prices").
The flipside, in RBA terms, is the crash (financial instability) they fear will follow a large increase in asset prices.
Inflation still low
September quarter inflation is out and it is still under control levels of 2 -3 %. Normally September quarter is higher than other 3 quarters.
Cheap iron ore, gold and oil may be the reason. Cause of the low prices, either people get sacked or hours cut down. So as their pay check.
Therefore if the commodities going to be cheap for considerable time, then not only the workers, but also share holders will not rewarded.
Normally companies pay their intrim dividends in Sep / Oct quarter and Finals in Feb / Mar quarter. This means that, people of Australia are getting less money to their hands.
So I can not see any good reason to hike rates, for some long time.
September quarter inflation is out and it is still under control levels of 2 -3 %. Normally September quarter is higher than other 3 quarters.
Cheap iron ore, gold and oil may be the reason. Cause of the low prices, either people get sacked or hours cut down. So as their pay check.
Therefore if the commodities going to be cheap for considerable time, then not only the workers, but also share holders will not rewarded.
Normally companies pay their intrim dividends in Sep / Oct quarter and Finals in Feb / Mar quarter. This means that, people of Australia are getting less money to their hands.
So I can not see any good reason to hike rates, for some long time.
Totally impossible for rates to rise anytime in the next year.
In the same vein, its totally impossible to see beyond late 2015. With the US stockmarket set to end in tears, we could well see an ASX meltdown.....like 1987, this may see money seeking refuge in property, which bodes well for people who currently own.
In the same vein, its totally impossible to see beyond late 2015. With the US stockmarket set to end in tears, we could well see an ASX meltdown.....like 1987, this may see money seeking refuge in property, which bodes well for people who currently own.
I have no idea how you come to this conclusion. To invest for better returns, one have to learn more about asset classes. I have to learn a lot it seems.
If what you saying becomes reality, I will be selling the houses and buying shares!
In the USA, PEs are way too high. Either earnings have to rise or the market has to correct.
Start by looking at the total marcap vs trailing GDP. Look back 50 years. What do you see?
You live in Perth and property has been kind. Will it be as kind over the next 20 years? If you think so, hang in there. If you think not, sell and reinvest in blue chip ASX stocks when the ASX falls 20% or more
Thanks Lord Shanghai.
Property has worked alright during the last two years to us in Perth. But it is the only asset class we have invested so far. While we won't mind playing the waiting game (waiting 20 years for the properties to double or triple), investing actively would make things easier! With limited equity and a low paying job, I have to do something different to move on.
Those who bought shares during GFC and then bought properties during 2012 would have done well. And those who time their property sales and share purchases in future could do well too.
Property has worked alright during the last two years to us in Perth. But it is the only asset class we have invested so far. While we won't mind playing the waiting game (waiting 20 years for the properties to double or triple), investing actively would make things easier! With limited equity and a low paying job, I have to do something different to move on.
Those who bought shares during GFC and then bought properties during 2012 would have done well. And those who time their property sales and share purchases in future could do well too.
That's not unlike our own share market and some of our property market areas here in Australia.
Many companies are trading on ridiculous multiples, and I'm not even talking about spivvy stuff like tech or mining.
Inflation data moves around, difficult to make projections for the next 12-18 month rates from one quarters data I think. Not sure about the data specifics, but the carbon tax coming off could have had an effect too.
I think the timing of rate rise will depend on whether non mining business investment (other than construction) picks up - the so called 'animal spirits'. Seems to have all the pre-conditions in place, low rates, high profits, strong pop growth, etc. So its probably a waiting game until it starts having effects on the real economy. When it does, the 'transition' that they've been talking about will be in full swing...
Good thing that carbon tax is coming off, but Fuel Surcharge is coming in and there wont be a extra penny left to increase inflation then.
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In terms of impact on inflation, the fuel excise will be very marginal. They stopped indexation of the excise in 2001, the measure simply makes it apply again. Its a very small effect on activitiy and prices (we're talking like half a cent p/l), despite fuel having a large effect on other industries.
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