Increase in Interest Rates - Expected Impact

MTR....50 bp is the most likely scenario for a number of reasons and it won't be via the RBA this time which is better for business..why:

1. Cost of money is increasing I see the banks passing on up to 30bp in the next 18 months. The smaller players have done this...the majors have held back due to the royal commission publicity/beat-up/scrutiny.

I can see markets in Sydney and some markets in Melbourne take a hit. But other markets like Adelaide, Brisbane, and Perth will do okay and will largely be unaffected.

 

What a lot of people tend to ignore about that era is that interest rates rose about 70% from the low point for that decade, which was just under 10% and then up to 17%.
Would a 70% increase in interest rates have a similar effect today if variable rates rose back up to 8-9%
Rental Yields in many areas were around 7-10% prior to 1988 when house prices shot up by 30-40% as interest rates dropped by 2% after the 87 stock market crash. It then started to go up and up and up, passing the previous highs of 13.5% and 15% from the previous 8 years.
What made this rise so difficult is that Perth , Sydney and Melbourne had seen some big price increases, yet some other cities were largely unaffected, as they did not see the big price movements after 87.
But investors were reasonably insulated as they had decent yields to fall back on, although I think investor numbers may have dropped by about 25-30% and then started to recover from 1994 onwards, with many areas seeing no real growth for 8 years. Whats the current rental yield like in Sydney and Melbourne if things start to go pear shaped.

 

Personally I take any book the way I like it, the way I interpret it, and what it means to me, I disregard anyone's reviews, hence why us human beings have a free will and mind over other species.
If there's even one thing that I can take out that makes my life for the better it becomes irrelevant how popular, unpopular, who reviews it or even what other people think.

 

Yes history shows these times of uncertainty hence why IMHO property investing for me personally is really a long term strategy...even better never to sell....and I really cannot predict what changes will have what effect, as all I can go by is to see the big picture an look at long term, that's what every book on compounding growth teaches us.... We had tech bubbles, political unrest, recession, downturns, issues, etc... yet for some reason median price is still more today than it was say 46 years ago...(well I didn't even live in Australian in 1970 - who knew?).
As the graph illustrates how medium prices fluctuated for the last 46 years:
What we can learn from Australia's median house prices from 1970-2016
I don't have a crystal ball, but usually after major rises there are some downturns and each state moves differently.

 

Where did those statistics come from?
1/3 of households being under mortgage stress on a .50bps increase I find extremely hard to believe.