Will the government do anything to destroy current boom trajectories?

Discussion in 'Property Market Economics' started by Sackie, 28th Feb, 2021.

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  1. Harris

    Harris Well-Known Member

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    One of the key points and the associated graphs he showed on the screen was quite interesting.
    Aus spend on average $55b overseas each quarter.
    Tourists spend on average $25b in Aus each quarter.

    So the shutting down the borders is the main reason $30b per quarter is being accumulated in the economy and is the catalyst that by the end of next week (officially), our economy will be in the same state it was prior to Covid being hit.

    There are a lot of businesses that rely on o/s tourists and suffering but because that $30b has remained within the economy (savings, consumer spending, home improvements), the overall equation is greatly in the favour of Aus economy - and the gov obviously know this well.. hence the prolonged border closure has been very beneficial for the gov and the economy. So no amount of whining would change the gov to lift that anytime soon!
     
  2. jaybean

    jaybean Well-Known Member

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  3. mickyyyy

    mickyyyy Well-Known Member

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    What does Christopher Joye said?
     
  4. Harris

    Harris Well-Known Member

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    Christopher Joye in Fin Review today - Int rates WILL NOT rise until 2024 - confirms RBA gov:

    RBA’s Philip Lowe brutally bashes bond bandits

    Long article but key points below - In fact Bill Evans in his presentation yesterday remarked very clearly that if RBA has said this categorically, then short-sellers with bonds to dump are in a very precarious position. He goes 'you never bet against RBA - def not in these testy times'.

    "In just one day, Martin Place brought short sellers to their knees, and three-year government bond yields rapidly converged back to the 0.1 per cent target.

    This was followed on Wednesday by Lowe’s speech, which was, as the governor remarked afterwards, designed to deliver some “clear messages” to investors.

    ...​

    Lowe’s second message was that (silly) expectations for “possible increases in the cash rate as early as late next year and then again in 2023” were plainly wrong.

    Or, in his blunt words: “This is not an expectation that we share.” And by “we” he means the people that set interest rates!

    ...​

    and regarding RBA only acting on IR front once the unemployment reaches below 4% level.

    "The available evidence suggests this is going to take years to achieve.

    Assuming away any future shocks, the RBA thinks we might get there in three to five years.

    ...

    This means that Martin Place’s main focus is on buying Commonwealth and state government bonds to exert downward pressure on the escalating trajectory of long-term interest rates, which relieves the ensuing upward pressure on our exchange rate.

    In the absence of the RBA’s valiant interventions, the Aussie dollar would be trading well north of US80¢, smashing exporters and import-competing businesses.

    The message the market has failed to understand is that the RBA’s QE program is here to stay."​
     
    Last edited by a moderator: 15th Mar, 2021
  5. Kevbo

    Kevbo Well-Known Member

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    I have been wondering whether regulatory intervention by APRA (as suggested by the RBA) would have any effect on bringing the house prices down to pre-COVID level. Given the record low interest rate and the fact that those who are on the hunt for property should already have enough savings (whether through actual saving, bank of mums and dads or equity of existing homes), I feel that houses prices would likely go up steadily until to a point where people can afford no more, then the boom will cease.
     
  6. Sackie

    Sackie Well-Known Member

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    I think it's been reiterated many times now by the RBA that IR won't budge for the next 3 years.

    The primary thing to monitor now is APRA.
     
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  7. Sackie

    Sackie Well-Known Member

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    That's absolutely phenomenal. I'd never thought about that impact.
     
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  8. Robbo80

    Robbo80 Well-Known Member

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    There is also the covid mental effect where people are realising that money is only a medium of exchange. No point having it if you can't get what you want.

    Further add to the post gfc wealth concentration to those who take the most risk (as governments have basically bailed out any that may have failed otherwise and rewarded risk taking). If you are not willing to go all-in then if the property is desirable enough there will be someone else that will.
     
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  9. mcdill

    mcdill Well-Known Member

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  10. Harris

    Harris Well-Known Member

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    Don't fall for the clickbait headlines :)

    One of the second/ third tier investment advisory firm, highlighting a 'possible' APRA move in the last quarter of this CY - and in return they get their mug shot in the article - fav these days amongst the press to keep generating content.

    However, even after saying there is a 'possibility' APRA comes in in another 8 months to cool the markets, she says this:

    "Despite the likelihood of reimposed lending restrictions by the final quarter of this year, RBC tips national house prices to gain around 12 per cent in 2021 and a further 8 per cent in 2022."

    I wouldn't worry about this.
     
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  11. mcdill

    mcdill Well-Known Member

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    OK thank you, back to watching the crazy prices!
     
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  12. Someguy

    Someguy Well-Known Member

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    Jobkeeper due to end soon, some may lose their jobs at the low end and people higher up to lose significantly. Will be interesting how this plays out on the share market and housing market. I don’t think APRA will make any play until the results of jobkeeper ending are known
     
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  13. Squirrell

    Squirrell Well-Known Member

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    The nz govt is doing something now to curb their boom trajectory. Not sure where they were 20 years ago, but better than nothing.
     
  14. craigc

    craigc Well-Known Member

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    Predict zero impact from Jobkeeper ending - 90,000 new F-T jobs & unemployment rate of 5.8% in the latest monthly figures, local economy is flying (with the exception of a few sectors).

    Victoria now (finally) seems to have sorted out hotel quarantine process (touch wood) and also getting closer to fully open again which will likely also boost hospitality and local tourism segments.
     
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  15. Someguy

    Someguy Well-Known Member

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    Owners of small businesses getting a free ride, shareholders in larger companies in a similar position, also executives and managers getting bonuses paid out. I see these as the biggest impacted groups when it finishes. I don’t see their significant loss to disposable income having much impact but surely there is some fallout.
     
  16. albanga

    albanga Well-Known Member

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    Watched an interview this morning and they were discussing this.
    Concerns with the increase in investment activity in Feb and March.
    OO still dominating but kesoline being added to an already raging fire.

    Discussion was around preventive measures such as reduced DTI’s and LVR’s specifically for Investors but not discounting OO.

    @Redom
    @euro73
    You two are always in front of the curve. Hearing anything on the ground?
     
  17. Illusivedreams

    Illusivedreams Well-Known Member

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    I agree this would be a very interesting.As the housing market is one of the main main drivers for the Australian economy I don’t believe that will be regulatory interference for at least 12 months that will likely let the property market run its course .

    So many construction engineering finance jobs at the moment I’ve been driven by the sperm dad in the current state of the recovery the government will deploy a wait and see approach.(apra)
     
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  18. MTR

    MTR Well-Known Member

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    Shortage of timber due to this boom. Builds are going to take longer.

    This is same scenario in US, adding $25,000 to build costs per house

    Certainly heady times in Oz.... go hard or home I guess
     
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  19. Sackie

    Sackie Well-Known Member

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  20. MTR

    MTR Well-Known Member

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