Shane Oliver: No new house price boom

Via Domain:

“The affordability is terrible. It’s improved but it is still terrible,” Dr Oliver noted.

But Dr Oliver, who estimates around 60,000 jobs have been lost from the construction and associated real estate sectors because of the slump in activity over the past 17 months, said there was little chance of a surge in prices as happened after the RBA started cutting rates in 2011.

“When we saw when other changes were made to lending, like the restriction on interest-only loans, some argued that this was a turning point. That’s not what happened,” he said.

“The NSW and Victorian economies aren’t going to bounce like they did last time. The federal government’s plan for first time buyers only affects 10,000 people so that’s really small.

“I don’t think we’re off to the races in terms of prices this time.”

I agree. But the FHB guarantee is not capped and specufestors will now be free to follow them in, with negative gearing in tow. So I expect some kind of stabilisation and meek grind higher with ever MOAR stimulus.

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