What is the next save for house prices?

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Basically, at this stage, an ongoing house price bust has moved to the base case for Australia. Macroprudential has worked well. The Hayne Royal Commission has reset credit. Housing supply is flowing. Affordability is disastrous. And the immigration economy has destroyed income growth.

The question now is is there another save?

The obvious place to start is monetary policy. The cash rate is at 1.5%. We are of the view that the RBA will not want to cut below 75-100bps, leaving in place some uplift for the carry trade and offering some protection to the Australian dollar and depositors.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.