MB Fund Podcast: Low Rates & Lax Lending Rocket for Australian Housing?

Our attention turns locally this week, as the country begins take stock of the coronavirus impacts and look to the future for drivers of Australia’s favourite asset class, property.

As news breaks that lending standards are being relaxed and the Reserve Bank of Australia continues to pump freshly printed monopoly money into the economy through the new Term Funding Facility, the bull case for Aussie house prices strengthens, but is this going to be enough to get it back in the saddle?

With the easy demand tap of high international immigration still closed, and the prospect of economic armageddon through currently undisclosed insolvencies and high un-employment, the traditional drivers of house price growth are still absent, and tipped to be for the foreseeable future.

And so, the question remains, can government policy fire up and save Australian property demand internally against the present downside risks as the country looks to the post COVID future? Clearly a battle royale is ahead of us, as the nation looks on with interest.

In today’s investment webinar, MB Fund’s Head of Investments Damien Klassen, Chief Strategist David Llewellyn Smith, Chief Economist Leith van Onselen and Head of Advice Tim Fuller debate if Australian Housing is about to be on yet another lax lending rocket?

View the presentation slides here

 

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Tim Fuller is Head of Advice at the MacroBusiness Fund, which is powered by Nucleus Wealth.

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Tim Fuller is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Nucleus Advice Pty Ltd – AFSL 515796.

Tim Fuller

Comments

  1. Tim FullerMEMBER

    Today’s viewer question of the week:
    Is easy credit the only answer to stop falls in Australian property?

  2. I have been saying this on this site for the past 4 years or so, lower interest rates = higher asset prices. The demand for housing form investors that I know is greater than ever, TD’s don’t even allow you to keep up with inflation.
    TINA – T

  3. Jumping jack flash

    I think the debt and house prices will grow regardless but I think the question needs to be whether the debt will grow at the required rate.

    It hasn’t done that since way back in 2006. The last 10plus years have been utterly hopeless in terms of debt growth, despite constant rate cuts and loose lending standards over the entire period. This is the major contributor to that slow downward trajectory of the economy over that same period.

  4. If the UK post-GFC is any model, property prices could sky-rocket. The issue longer-term is the debt burden. It literally saddles several generations with unpayable debt — unless inflation is let loose. Which it will be, as that’s the only solution.

    (If you can call it a solution)

    • Jumping jack flash

      The debt is already all but unpayable by any single person in a single lifetime, but the mechanism du jour is to find an infinite supply of greater fools to pass the debt onto, adding the required amount each time it changes hands. And as the saying goes, there’s one born every minute.

      But if natural population growth isn’t quite enough, then other sources are tapped into…

      Inflation in the traditional sense isn’t actually required.

      But what certainly is required is for these greater fools to be eligible for those new, larger, amounts of debt, regardless of their circumstances.

  5. what a depressing future for our children and our grandchildren.
    A life of debt and servitude

  6. FYI Leith, if you happen to read this – regarding moving to Brisbane. Vehicle transport times I’ve been quoted in the last couple of weeks have gone from 6-9 days, to 11-15 days, and now it’s currently at 18-20 days. They’ve even had to start shipping vehicles via sea to deal with the volume. I’m told there has been an “exodus” from Victoria to Qld. This is like a replay of the early 90s.