Up, up and away.......!!

[Player]

Will interest rate rises be the undoing of the FHOG incentives and create our own sub-prime?

Credit will be tight by global cost of money increases.....and US mortgage insurers treading more warily......too little, too late.

Will the rate rises by keeping customers away finally have a role to play in correcting values and bringing about some equilibrium to our property markets?

Opportunity eyes on folks



http://www.theaustralian.news.com.au/story/0,25197,25839599-601,00.html

http://www.businessspectator.com.au...races-for-a-tough-recovery-UB9RC?OpenDocument

 

[Rockstar]

Michael Yardney seems to be feeling the opposite way, Michael, going off this recent quote from his latest newsletter - though he does base his assessment on a falling inflation scenario.

Is it onward and upward for our property markets?
.......There are now enough significant indicators that many of the world’s economies have seen the worst and many are starting to recover; while others are no longer worsening.

Having said that, it’s likely that the Australian economy went backwards in the June quarter and that this will continue into the current quarter. This, along with falling inflation and rising unemployment, is likely to prompt more interest rate cuts over the next six months.

 

[Nathan]

my predictions is around 12 months worth of nil changes.

This is speculation, but i draw to this conclusion due to the fact we are trying to kick start the economy, pump 100 billion into stimulus and drop cash rate 400bpts. To turn around 6 months later and raise rates again and kill economy?
I doubt it.

Think cash rate will be under 4% for next 18-24 months.

Need few other factors to take effect before rates will rise.

BTW have been wrong in the past but it would be silly of RBA to increase rates at this point.

 

[Player]

Shane Oliver also reckons rates might soften further, here some to more to add to the confusion:

http://www.ampcapital.com.au/K2DOCS...ession-recovery-or-both_09-07-2009.pdf?DIRECT

 

[WinstonWolfe]

The more I read about China's economic stimulus, the more I see the global economy going into a double dip recession, with the second dip much nastier. I'd be interested in hearing anyone else's view, who is taking an interest in it.

 

[Aaron Sice]

WW - i'm quoted as saying this is the eye of the storm, things look rosy and peachy and then KA-POW - we're blown away as we walk back out into the sunlight.

the tail is always worse than front - however, it's also a lot shorter.

 

[BV]

I agree with others that interest rates won't be going up in a hurry.
It's very scary out there.
Hopefully as soon as the FHBG ends and residential construction stops
infrastructure projects will start and people will still have a job....

 

[markpatric]

This thread is the first I have read which correlates with what I read over the last few years might happen.
Kiyosaki among others warned of it and it is panning out exactly as he and others predicted, only to follow over the next year or two with the stockmarket to implode and things could get nasty for a while, it is not difficult to see this happening many are not curbing thier spending at all.

So as has been predicted things ARE looking up but will it only be temporary?.
I am thinking it is which is why right now I own no real estate and have no money owing, kind of lucky though that it worked out as it did.
Today I read that Rudd is trying to warn people that rates will likely rise, don`t think he would say that unless he thought it would be significant maybe even moreso than he is letting on.
Higher interest rates, higher unemployment and many people owing more than thier homes are worth and needing to sell fast is not a good scenario.
At least in the US you can hand over the keys and your monetary liability!.
Higher interest rates and rising to who knows where are going to turn investors off very quickly.
It might seem grim but sometimes you do need to look at the worst case scenario as many have already been forced to do!.

 

[craigb]

I am not in a great position for a rate rise , the only thing that is calming to me , is that if it does, start rising , then it will be in the smallest of increments,
But i cant see changes for about 12 months , the economy needs to be like puffing billy, "steaming along" before the rates get raised,

 

[MC1]

Rudd says rates to rise
Unemployment to rise

Seems that it would put Asutralia back in the very same position it is trying to get out of.

Next week someone else will be saying something else!!

 

[BV]

Rudd says rates to rise
Unemployment to rise!

Yes well, the 2 don't go together
With higher unemployment the economy slows down so they'll have to lower interest rates to keep the economy going

 

[investor888]

My 2cents worth. When round 2 of GFC hits, governments may be tempted to spend even more money which they don't have. The eventual result will be inflation from all the printing of money. Won't matter whether unemployment is going up still, the RBA may have it's hand forced, just to keep a lid on it.

Were good for 10-12% interest rates.
Bargins galore in late 2010/2011. )

 

[Ajax]

Have just been re-reading book by Fred Harrison, Boom Bust House Prices, Banking and the Depression of 2010.

Has theoretical chart on property prices over an 18 year business cycle.

I'm not sure where we are on his chart.

I keep looking at the 2 year winner's curse phase (and think we might be here)...this is where property prices continue to rise in the last 2 years of 14 years growth...then fall of a cliff.

 

[joeExpat]

Were good for 10-12% interest rates.
Bargins galore in late 2010/2011. )

We can dream.. but 8 or 9% should do the trick. May seem odd to some but many property investors (low/fixed debt + cashed up) would welcome higher rates for the bargains it would inevitably bring.

 

[Bill.L]

Hi all,

MC1,

Next week someone else will be saying something else!!

Brilliant summary of all the self promoting, economic commentators (who think they are Gurus).

It is much more important to think through what is likely to happen in different scenarios, instead of just higher interest rates = bad. For instance why would interest rates be higher?? Most likely answers are increased economic activity and/or inflation. Both of which have historically proved to be positive for property.

Going back we see that....
'01-'03 rising interest rates, rising property prices.
'87-'89 rising interest rates, rising property prices.
'72-'74 rising interest rates, rising property prices.

On all 3 occasions there had been a substantial sharemarket fall, rising unemployment plus lots of G&D about the end of the financial world as we know it, leading up to/including those periods. Somehow we survived.

If looking at Sydney property, then those 3 previous periods had slow/negative growth for a few years AFTER the increases in both property prices and IR. If history was to repeat/rhyme then you would expect Sydney to boom WHILE interest rates rise for a couple of years, then be soft/pullback/crash after that.

Of course history could be bunk and this time it's different.

bye

 

[evand]

I'd love to see rising rates and the fallout of property prices. Owners running to fix rapidly rising fixed rates. I'm in a position to capitalise on it.

If you think positive gearing at 5% interest rates and 6% gross yield is fun, you better fix now. Although fixed rates are rising as we speak.

 

[steveadl]

I'd love to see rising rates and the fallout of property prices. Owners running to fix rapidly rising fixed rates. I'm in a position to capitalise on it.

What makes You think they will Evan?

"Nah, they can't go up much more, no point in fixing now!" - and I'm assuming they even put that much thought into it. History will repeat irself as usual.

 

[Ausprop]

I need to read Rudd's essay properly. can anyone else summarise why he feels rates are on the up? If it is...

1) the economy is mending... then great

2) inflation... great, means unemployment problem fixed

either way both of these will be good news

OR

is he talking of stagflation? if so why?

 

[Aaron Sice]

IRs have to come off the historical lows.

what a prediction - seriously.

it's like being at a function party and he gets a crowd gathering and saying "watch this everyone! this empty wine glass will be refilled ANY second - wait.....wait...."sir, would you like more wine?"...see!" and then everyone lauds around to pat him on the back.

 

[Ausprop]

the intonation though is that they will rise steeply and rapidly - even tho he said they will just rise.

if they just rise a bit then who cares. if he feels they are going to go off then it would be very interesting to know why