Strong mortgage growth bullish for property prices

Yesterday’s mortgage finance data from the Australian Bureau of Statistics (ABS) was unambiguously strong, driven by owner-occupiers:

Total new mortgage commitments (excluding refinancings) rose by 25.5% year-on-year in September, driven by a whopping 33.8% growth in owner-occupier mortgage commitments versus 4.2% growth in investor commitments.

As regular readers know, mortgage growth is one of the best indicators for property price growth having displayed a very strong historical correlation.

Below are charts plotting the annual value of mortgage growth (excluding refinancings) against annual dwelling value growth.

First Sydney:

Next Melbourne:

Next Brisbane:

Next Perth:

Next Adelaide:

Finally, below is the 5-City aggregate:

As shown above, the mortgage rebounds have been strongest across the smaller three capitals, which is also reflected in their recent price rebound:

Brisbane and Perth are looking especially enticing.

By contrast, Sydney’s mortgage market has only experienced a moderate rebound, pointing to moderate growth, whereas Melbourne’s remains soft.

Unconventional Economist
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Comments

  1. The first chart looks unbelievable …… people are going all out on debt? … yet apparently everyone is saving money and avoiding debt?
    Band=ks must be offering huge loans even if you are Jobseeker/keeper……….

      • Thst assumes interest rates will remain at 2%

        This QTR yes

        In 5 years these people will be forced to renegotiate with private lenders

        AUST banks won’t exist in their current form

        We are heading into a global banking crisis worse than GFC

        They will have to restructure the banking system

        There won’t even be AUDUSD in 3 years, it’ll be some other Libra type of structure as CB go digital in a new reserve propbably like Libra where reserve is a global basket

        Any fixed mortgage holders will be forced to renegotiate in 3 years in some other currency

        Do banks call in loans

        I’m really not sure but we won’t be avoiding an Ireland 2.0 unfortunately

        This will be all driven from offshore not AUST.

        The European banks are on their last legs

        The banking crisis will spread throughout the world, it’s very interconnected between all the very big players

        HSBC DEUTSCHE COMMERZ other Eurobanks and big US banks through derivatives etc

        It’ll start in Europe, you wait……..look at the lock downs zombi banks and ECB won’t be able to bail out

        The crisis is too big

        I’m not sure what we will do

        After the crash they will have to rebuild a new financial system

        That’s anyone’s guess

        Enjoy the last of the euphoria

        • No offense but I read these exact post for the last 10 years here, always so wrong, always next years GFC, and these posts have cost dearly to those who believed them and did not purchase their house.I still remember “DontBuyNow” 10 years ago, it s not even funny.

          Nothing is safer than a house (with land&backyard) here, the game is rigged for sure but that s the reality.

          • boomengineeringMEMBER

            BNICH is correct in his therories but the timing is the caveat and luck should also be factored in.
            Saw a property in Dee Why Headland about 20+ years ago and wrote to the nephew how ridiculous the price was at $300K now it’s price is 3M. Not saying it’s w worth that but if you want it now that’s what you have to pay.
            Luckily I went against my own crash predictions and bought our place about 13yrs ago.

          • Dam

            What you don’t understand it’s already happened
            It’s being hidden under lies
            People all over the country not paying loans, RBA free money to people who will never repay
            QE

            You wait what’s to come

            State governments are broke – they are going to introduce an owner occ land tax
            Increase capital gains on investment property
            I know no one can see it, but we are now entering a multi decade reversal of the global bond bull market market
            Commercial rents are not being repaid
            Home loan bank holidays

            The list goes on ….. stimulus is going to wear off, interest are going to rise after we have the deflation crash we will get huge inflation

            The problem has not gone away it’s been swept under the rug,

            You can’t stop nature

            We don’t have a liquidity problem we now have a solvency problem

            Unemployment is going to be 25% plus globally

            The crisis has already started, they are hiding it

            These policies actually make the problem

            I would accept your argument if prices of houses were rising into falling total mortgage debt but it’s not

            Debt is building and building in every sector

            You need to look at maths, the financial system bid only surging on all these lies

            Interest rates from 2.2 to 3.3 isn’t a 1.1% increase, it’s a 50% increase

            A reduction of interest rates from 5 to 4% is a 20% drop

            A reduction of interest rates from 3 to 2% is a 33% percent reduction

            So in reverse an increase in interest rates from 2.2 to 4.4 is a 100% increase

            The system is only holding together because of reduction in interest rates plus these other dodgy holiday repayments

            like interest rates reduced from 6 to 2 over the last several years they are also going to rise

            You wait until 1st Qtr next year

            TD are now 0.1%, people are going to start pulling their money out

            Also if they go to 1%home loan then deposits have to be negative 2%

            Add in all the taxes and negative interest rates etc the money just disappears

            You wait next QTR you are going to see home loan interest rates rise and state government introduce owner land tax

            Banks are close to insolvent all over the world

            I am going to be correct

          • It’s got nothing to do with land and a home being ‘safe’ per se. It’s got everything to do with a debt-based money system though. What we’re seeing here is the consequence of being able to expand the money supply without end.

            If we were on a commodity-backed monetary system a) a bubble of this proportion would never have developed and b) we’d be in the depths of a deflationary depression by now if it had.

          • boomengineeringMEMBER

            bcnich,
            Well said, I’ve been banging on about how dangerous low interest rates are for many years when people would say it’s safer now than when 17% plus was the case. I would reply if a couple were paying 1K wk at 20% a 1% rise wouldn’t hurt much but paying off 1K at 1% the 1% increase would equate to 2K / wk which would devastate

          • @boomengineering, I understand the proportional increase is more significant from 1% to 2% as opposed to higher rates but to suggest that a payment doubles from 1k to 2k is ridiculous. Assuming P&I payments @ 1%, if someone is paying $1000 per week, then they have a $1,350,000 loan. If the rate increases to 2%, their payment becomes $1,150 on the same principal amount. The rate would need to jump to circa 6.7% to double the weekly payment to $2k.

            A little different, no?

          • boomengineeringMEMBER

            Eagle.
            That was a hypothetical case to try to explain to the unthinking acquaintances, on the other hand there are a lot on IO loans.

          • FUDINTHENUDMEMBER

            If they can just keep lowering the rates forever everything will be fine and property won’t crash..

        • But that’s exactly why interest rates can never increase — because it blow the housing market to smithereens. Ergo, you can guarantee that policy rates will be kept low forever — and ‘curve control’ will be a thing too.

          The potential turd in the punchbowl is a burst of inflation. What do policymakers do then?

          • “Rates low for ever”

            I’m sorry anyone who thinks that are going to be disappointed

            Let’s see if the TRUMP gets in

            The system will be turned upside if he wins

            I think people underestimate him winning again

          • Agree with one exception, that is if the US weaponizes Fed rates in a proxy war with Chyna. If things go pear shaped in US this is a possibility.

          • @tonydd
            The US could indeed weaponise rates in a war with Chyna — however, that strikes me as MAD. If they try and blow Chyna up they blow themselves up.

            And here’s the other consideration: a known unknown, if you like. How much gold does Chyna have? This matters because if they have more than the US’s official 8,199 tons then they’ll gain the upper hand after the existing Dollar system implodes. Russia has already seen this development and has been furiously hoarding gold since 2012. I’m no Putin fan, but that guy is nobody’s fool.

        • I agree with your theory, in theory. But having watched Japan keep their zombie alive for so long I reckon the rest of the world can do it a while longer yet. Obviously they will need to change the rules and the printing presses will be bbrrrrring like crazy. I’m pretty sure I will live to literally see money being thrown from a helicopter before I die and before the worlds economy dies from deflation. When everything is valued in fiat then the only constraint on “price” is the amount of fiat produced.

        • Narapoia451MEMBER

          I don’t think anyone disagrees that the current state of the system cannot survive interest rates at that levels without serious stress. What’s the mechanism by which the interest rates rise if banks have access to 0.25% interest capital from reserve bank? It seems like the banks are just exchanging their overseas capital borrowed at higher rates for this RB handout. While this is available surely the rates can be contained?

          It’s crazy, but that seems to be the current state of play.

          • This crisis coming is way to big for any central back to stop

            The crisis is in credit

            Credit spreads are going to blow out, Euro interest rates are going to increase

            We are facing a global banking crisis, with Europe at the centre

            They are hiding the Euro banking crisis with these lockdowns now out of control

            I could go on and on …. the fed can’t do anything this time, they’d have to print $50 Trillion to offset this and it won’t be happening

            Watch for a possible trump upset win

            We are going to have to rebuild the financial system from the ashes

            We are in the next Great Depression it’s just being masked by cash hand outs that are about to finish

            If Trump wins you’ll see the USD through the roof that’ll trigger mayhem in EM and flow through Europe UL then elsewhere

            Global banking system is now too interconnected

    • C Diminished Chord

      10% of the work force have lost their jobs – permanently – this is still filtering through. 150,000 mortgages are on hold or defaulted across all majors – uinvestors have crashed out of the market completely, there are ZERO foreign buyers, ZERO migrants, ZERO students…but we are expected to believe there is a 25% increase in people buying houses ?

      Really ?

      What we DO KNOW is that the banks, APRA and ASIC all agreed to allow indexes and spruikers to say whatever is necessary to keep the market afloat – they even SERIOUSLY considered the idea of putting a halt on all sales.

      But now – magically everyone is buying like crazy.

      Even more ridiculous are the claims that in the last month 3,000 Melbournians moved interstate to QLD, NSW, SA and TAS.

      People just accepted that from CoreLogic like it was totally fine – except there is one problem – the borders were shut and not one single person did that.

      So what is happening ?

      Banks have prepared for a 60 % crash in profits, with huge forced mortgage sales and bankruptcies – and to avoid the market completely collapsing they are transferring those failed and bankrupted mortgagees bank onto their books with “new loans” issued by the banks – to the banks – as they “buy” the failed houses.

      Market is not only going up – its bloody booming – as the banks buy up all the failed mortgages – leave people in their homes and prevent the market from crashing.

  2. Friends (yes i have more than one) are telling me 30+ people turning up to open homes in Perth. Dont know how true that is. Seems excessive but prices definitely going up. Heard from a mate a co-worker of his bought a second house so his daughter and her family could move back to WA from where ever they are stuck.
    Now that WA is looking to open its border i cant tell if the trend will continue or not. It seems in two weeks resource companies will be able to hire fifo’s again i guess. If the current trend continues its not impossible for oz to be covid free by Christmas. Assuming scummo dont screw things up by importing Nazi China students. So if internal travel is free again then there is no reason for FIFO workers to be living in WA. One assumes that reduces demand here.
    Further to that news is reporting that new rental contracts are being signed right now for 20% above the pre nazi china covid pandemic. And that in march next year when the eviction and rental price increase moratorium expires not only will renters have back rent to pay but they are facing an immediate 20% price hike in rent. Plus i guess there will be a lot of overdue evictions, so that will free up rental capacity more i guess.

    • Angry
      It’s going to end in tears next year
      These prices are based on interest rates.being 2%
      It’s one QTR
      They did the same last year too
      Anyone who buys now basing their repayments on 2% for 30 years is crazy
      Wait until Q1 2021

      Just have a look at the Perth chart the mortgage growth is going to go down vertical Q1 2021 like it always does on the chart

      • What if federal and state governments issue bonds at these low rates, and sell them to the RBA, then use the money to spend on things which will increase aggregate demand and legislate for wage increases in the order of 4-5%?

        This would give the RBA inflation and see rates rise gradually. Sure, real estate, equities and (especially) bonds might not do so well, but no crash either as wages grow. And who will own the bonds? The RBA.

        A “blue wave” Biden presidency would not look that different to this scenario. And where the USA goes the sheep will follow.

        My point is inflation and rising rates can happen and not be the apocalypse you expect.

      • Jumping jack flash

        It will intensify up to and past April next year as 40K of early super access is leveraged into 800K of debt.

        After that they’ll need to think of something else.

        Possibly by then Phil will have completed his research and will embrace NIRP

        But look at that debt go!! We’re finally growing at the correct rate. Can we sustain it though? Will they panic?

    • innocent bystanderMEMBER

      yes, that’s pretty true from what I am seeing.
      big turnouts and multiple offers on 1st home open.
      houses (like for like ) up 10%-20%
      apartments not sure – but haven’t seen too many price drops.

      rentals? hard to find so prices must be up?

      hard to say which way open borders will play out? – have ppl recently made big purchases based on a short term covid issue, or do they think covid is just temporarily under control so the big decisions are more positioning for the longer term?
      also, money is cheap, and return on cash is lousy, and some are worried about bank viability so they have gone for the hard asset they know – r/e. that’s what I am told by the buyers I know anyhow.

  3. alwaysanonMEMBER

    We recently bought a house and at these interest rates and with a healthy deposit our interest paid, or ‘rent to the bank’, is 1/2 what we were paying in rent for a 1BR unit. It seems the common Aussie thing is to consider payment to principal in the mortgage payment as ‘savings’ so the rest is just a forced savings component. When you look at it that way it totally makes sense to buy. The question is when to try to lock in a fixed interest rate. It seems bcnich thinks that is something we should do now?

  4. Real estate is manic in Adelaide. Can’t believe how prices have run up recently. Some middle aged friends ( one approaching 70) bought a new duplex for rental purposes because deposit interest rates were so poor at the bank. Look like govt plan to push people to spend by making money worthless is working nicely.

    • C Diminished Chord

      30% increase in NEW MORTGAGES – but only 4% are investors and 5% are first home buyers !!

      So 20% are existing mortgage holders taking on a new property – $25k is all they get to go out and buy a second property !

      Truth is these people have bought and are building their rural tree/sea change – once its ready they will sell their Melbourne / Sydney place and move to their Northern sunny family home to spend more time on lifes dreams.

      I think Melbourne and Sydney are in for carnage.

  5. Arthur Schopenhauer

    Cheap to buy money, and cheap to wash money in Oz.

    Could Sydney or Melbourne have increasing debt and falling prices?

    Depends where the OS money was coming from, if the OS money is independent of the Oz banking system, and if the flow has stopped.

  6. * gold is sending you the memo
    * gold is up 100% in 2 years (USD)?

    If things were that good, why buy Gold ???

    You may get a blip down to 1600s in gold of trump wins tomorrow but you are going to see a new base in AUD 3,000s

    We are at the start of the deflation crash, any asset exposed to debt falls

    Rates are going to rise because of deflation that creates credit risk

    No one will lend to each other at 0%

    They only lender in the world now are central banks

    CB are virtually done especially in Europe and US

    They have credit lines into banks zombie companies that are actually insolvent

    • Rikki StocksMEMBER

      I certainly won’t lend to the banks at 0%. I panicked early & put 10% of my funds into bullion around 8 years ago, the rest is in quality gold miners (a more recent purchase).

    • Samuel Reynolds

      bcn, you sound a bit like Dr. M. Krall, the guy who build 90% of all European banks credit failsafe mechanisms. His theories seem to be pretty much in sync with yours.

  7. Totes BeWokeMEMBER

    Anyone know if Zac Efron and Matt Damon had to get FIRB permission to buy $22m million dollar property in Byron, or it’s okay, no one cares because they’re popular white Americans?

    There’s been multiple properties around the harbour go for insane amounts bought by foreigners and haven’t heard a single mention of FIRB. Even on MB.

    Do we still have a FIRB? Working from home today? Try tomorrow, or maybe next week.

      • Totes BeWokeMEMBER

        Do you seriously look at it like that?

        If you’re okay with global ultra rich buying the first tier, you also okay with them buying the 2nd tier? 3rd tier? 4th?

        Not forgetting Australians who would have bought the first tier are now competing for the 2nd tier etc etc etc.

        Where do you oppose it?

        It’s people who don’t think that are costing us our country.

        • I’m okay with them buying the first tier. Not any other tier. They can buy the flammable apartments too, if they want.

          It would be globally unusual to prevent foreigners from buying any property in Australia.

          I’m sure the economic benefits resulting from the presence of A-list Hollywood stars will more than offset any harm done to the Australian purchasers of Tier 1 and Tier 2 properties.

          • Totes BeWokeMEMBER

            …”any harm done to the Australian purchasers of Tier 1 and Tier 2 properties”…

            Of course it does. The reason they’re $20m is the competition for them. Ditto tier 2 etc.

            Other than serving the rich who have already exploited Australia and received all sorts of favours, who else does it benefit, and what’s in it for Australians?

            Unusual? While we have the highest property prices in the world, anyone thinking (outside the greedy who put themselves ahead of the country) would be pushing for the unusual.

            Economic benefits? Destroying Byron.

          • Do you want to be a deserted, depressed island where at least property will be cheap, or something? These rich and famous people will spend heaps in the local economy and possibly bring film productions to Australia. I don’t really give a stuff about the Australians who can afford $20M properties — and anyway, I’m sure nearly all of them would prefer that there be a free market in top tier properties.

            There would be no $20M properties if foreign capital had no way of getting to Australia, but that would mean shutting down the mining industry as it’s bringing in far too many foreign dollars.

          • Totes BeWokeMEMBER

            “don’t really give a stuff about the Australians who can afford $20M properties”

            There aren’t any, so they’re competing for lower tiers.

            …”Do you want to be a deserted, depressed island where at least property will be cheap, or something”…

            I want a viable Australia for Australians into the future. Right now, you’re watching LNP destroy the entire lot, and Labor watching them do it.

          • “There aren’t any, so they’re competing for lower tiers.”

            Interesting theory… makes you wonder who Matt Damon bought his place from… well anyway, thanks for the chat.

          • Totes BeWokeMEMBER

            That’s a stupid question.

            It was probably a $10m house a year ago, and is now a $20m house because elite white Americans want to buy it. Do you FINALLY GET IT?

            Can the paying members be given a vote on the enormous growing number of non paying members being able to comment? It’s wrecking clarity and consistency.

          • $10M huh? Could have been $1M if all immigration to Australia was banned in 1986, and all mining was banned altogether. Bummer. Australians being priced out by the existence of capitalism.

          • Totes BeWokeMEMBER

            I want to get in a time machine with some great doctors and medicine and go back to 1950.

            Capitalism, globalisation and neoliberalism aren’t fun.

      • March what you don’t get is a rising tide lifts all boats. Look at how Vancouver has become unaffordable due to wealthy Chinese buying up all Tier 1 property/land.

        • Totes BeWokeMEMBER

          True Gavin. If the tier 1 is bought by foreign elites, all other tiers go up in price.

          No wonder the elites love it. No wonder the FIRB are absent. No wonder LNP, Labor and MSM are silent.

          • Waiting for FIRB to do their job will mean waiting a long long time. I won’t be surprised if a Trump election causes some left leaning / liberal types to consider moving to Australia. Thus pushing prices up on our East Coast.

          • Totes BeWokeMEMBER

            Yep. I can imagine that too. Very sad times we’re living in.

            Most of the left are fake and or clueless IMO.

            Alarm bells should be heard by the plebs with all the elite leftist arty type celebrities bagging Trump.

            Whatever they say, a pretty good position to take is the opposite i reckon.

        • Chinese are buying everything in Vancouver — what’s more, with dirty drug money. It’s not investment, it’s laundering. We know how Matt Damon made his money.

          • I’ve no problem with Matt Damon or the way he made his money. What I’m saying is, they should be subject to FIRB approval like anyone else and in order to buy here they just meet criteria. Personally I would block foreign real estate purchase to non citizens.

            If they want a Holiday Home then we should tax them at a high rate so it doesn’t become just a store of weslth for global elites.

            If Matt Damon wants to become a citizen here. No issue.

          • Why would we want to miss out on hosting these big spenders, with influence on their industry and the ability to bring work and productive investment to Australia… just to negate the small amount of house price appreciation that will trickle down from these Tier 1 properties that only Australia’s own global elites would buy? It would be such an own-goal for our country.

            Look at Peter Thiel in New Zealand… if NZ told him to GFY, then Xero might not have succeeded. And I’m confident that Xero and associated companies have done more good for NZ than the small amount of house price appreciation that can be attributable to non-criminal global elites buying Tier 1 properties.

          • Totes BeWokeMEMBER

            I don’t care where they’re from. I don’t think Australian real estate should be available for them to buy.

            There’s just far too many rich people who would buy if we let them. Just say no to all of them, and there’s no rorting.

    • There’s no mystery here: low interest rates mean higher house prices, always been so and always will be so IN A HOUSING SHORTAGE SITUATION.

      When there is no shortage of housing (or any other item), the item continues to trade at its cost of production. Take the example of a meat pie mass produced in a large oven. When interest rates fall, it becomes cheaper to borrow to buy a pie oven. In theory the pie can now be sold cheaper.

      Pies are not in shortage and their price does not rise when interest rates fall.

      Sydney houses are in shortage and their price does rise when interest rates fall.

      • Nonsense. Pies =/= houses. People do not eat numerous pies at a time. In houses, you have some people who own many, while others have none. But nobody lives on the street, so there is no shortage of shelter. In fact, at any one time about 10% of dwellings are standing empty.

        Why are you still pushing this disproved nonsese?

        • the lower interest rate is only half of the story. The deal needs a future buyer at a higher price for this to work. There is no intention or capacity to repay.

          • Jumping jack flash

            THIS!

            It is a transfer of debt from one person to the next, growing by the required amount each time to provide expected capital gain and pay out equity.

            It is fairly simple to see that the debt “repays” the debt. Technically the debt is rolled over. It is similar to how banks work. Only the greatest loser will repay all their debt with their own money

            The key to this system working is the rate of debt growth and it looks like we may have cracked it! Good times ahead guys!

  8. C Diminished Chord

    Basically – Australians are a pack of morons – it really is that simple.

    Imagine spending $900k on a 1960’s cookie cutter house on the outskirts of Geelong in the middle of a pandemic with the US about to implode and China cutting off all our exports and the government throwing not billions – but literally a trillion dollars at keeping things afloat while the banks have declared they are expecting a 60% collapse in profits as the housing market implodes and 150,000 mortgages are forced into liquidation while a country dependent on foreign tourists, students and AIRBnB guests has zero foreign arrivals.

    BUY NOW!

    Morons – its actually just that simple.

  9. Jim's Central Banking

    Sydney houses look to be taking off again too. MB has underestimated low interest rates repeatedly.

    The obsession with a lower dollar is screwing us.

  10. If prices are still going up mid next year I’ll probably be buying. I can’t put it off any longer and the fact that the authorities have done everything to avoid a crash means they will continue to do so, otherwise what is the point in preventing a crash to begin with. With China trade starting to get hit, we’ll have to rely even more on pumping house prices, so more stimulus will be coming.

    CBDCs will save the day in the end. A UBI will be first order of business. The UBI will be used to take on more debt.

    • C Diminished Chord

      LOLS – ok.

      Take a look at what is being actually said mate. 30% increase in mortgages right – but only 4% of those are to First Home Buyers and Investors. Literally ZERO demand from new migrants, ZERO demand from over seas, while we also have a HUGE oversupply of stock ?

      So we are being expected to believe that without any increase in demand – and a collapse in investors – housing demand is now the highest since the GFC win the middle of a recession with 150,000 mortgages on hold and going into default….and you believe this makes and sense or could be remotely true in any reasonable way ?

      How about this – the RBA has given the banks a $200 BILLION line of free credit which is public knowledge to secure the housing market – that money is being drawn down on to purchase failed or defaulted mortgages. These buy backs are issued as new credit. This prevents the residents from being kicked out on the street – it stops a housing crash, it primes everyone with stories of huge demand, and it also explains the completely and utterly ridiculous maths behind what is being claimed in this endless spruik.

      Its a lie.

      • LOLS – Ok

        A fiat currency is simply a unit of measurement, and that unit of measurement is controlled entirely by people who are happy to destroy it, along with the country, to keep their gravy train going. We aren’t up against immigration, or unemployment, or any of that crap. We are up against a group of socio and psychopaths who are in control of all areas of power and the unit we measure value in.

        Everyone here has underestimated these people for years, why continue to underestimate? These pscyhos want asset and general inflation, and they’ll get it because they have the power and soon even more. CBDCs are a massive game changer and few seem to see it. Our only hope is that these CBDCs are a few years away yet.

        • C Diminished Chord

          People see these things coming down the pipeline and make the mistake of thinking thats it – new paradigm – reality is they take decades to implement.

          China is about 5 years ahead of anywhere else on earth with their digital currency – it has been tested in 5 capital cities and inter-banking with some regional areas. It is highly rejected by consumers and they are facing an uphill battle.

          But here is the thing with block chains that entirely negates your position – normal currency was backed by Gold – this limited sovereigns ability to just print it – hence it was not fiat – it was gold backed. Block Chain Digital Currencies can not simply be printed en masse – they are limited just like gold standard currencies.

          Back to my original point – Australian dollar is predicated on TWO things – demand from China/Asia for gas, coal, ore, agriculture, gold, copper, etc Secondly it is widely held by central banks, pensions, savings, 401ks around the world as it is AAA investment grade and can therefore make up part of these funds highly secure portions.

          When the AUD breaks with China’s trade war – and that is happening – we will be downgraded on the debt we hold through mortgages and government printing. That will crash our dollar through the floor. There is simply no question on this issue and this was very clearly highlighted at the start of the pandemic – this was a glimpse of 2021.

          That ends the printing press. Right there. This will will explode our domestic prices with traded inflation through the roof and collapse every single mortgage as the bank is FORCED to raise interest rates. As a country we have one option and that would be to massively rebuild our domestic manufacturing capacity to overcome traded inflation – that would take two decades.

          There it is – that is the circuit breaker on the printing press. It breaks when confronted with the global currency trade with domestic inflation – something no MMT theorist has been able to rationalize.

          That is where we are right now – we are in a trade and currency war allied with the United States against China – and we are about to lose BIG TIME – house prices will collapse so fast the idea of a million dollar 2 bedroom flat 40 kms inland overlooking a cow paddock will seem insanity – and it is.

          • I think you misunderstand what a CBDC is. It is simply a digital version of bank notes, a way that normal people can spend CB cash reserves. If a CB starts depositing digital cash into your account, you bet people will spend it. Just like they would if you gave them a few 100 in bank notes every week.

            It’s happening, just a matter of time, and when it does everything else goes out the window.

            It also doens’t matter what MMT hasn’t been able to solve yet. The people running the show are psychos, they don’t give 2 sh1ts if they destroy everything. Especially when it won’t be on their watch.

  11. Goldstandard1MEMBER

    It doesn’t smell right at all. There is so much going wrong at the moment it’s almost like some people are puting their heads in the sand and buying, and others are puting heads in the sand and saving. One thing is for sure, next year is worse than this year so leveraging up in debt @ 0% interest rates doesn’t smell right to me.

  12. Spoke to a mate in real estate in Sydney east who is a very decent guy, they do exist.
    Units going nowhere but houses going gangbusters. Simply not enough of them for sale and as noone wants a unit now, all the focus is on houses.
    Also a lot of expats coming home from Hong Kong with literally millions to spend.

  13. Prices where I live in Baulkham Hills (North West Sydney) have increased by at least $200,000 in past 6 months. Everything is selling, busy open houses and competitive auctions, prices $1,250,000 on a main road ( these were $950,000 immediately before ScuzMo’s election win) and $1,450,000 plus otherwise, stock is approximately 30 years old. No need to renovate to get these prices. And it’s gathering steam, a rate cut today will send the prices even higher. The idea that banks are buying these houses is nuts, it’s young families with children in primary school.

    • The90kwbeastMEMBER

      The Hills does seem to be going gangbusters, its one of the few places left in Sydney that isn’t an overpopulated dump, yet thanks to the metro & M2 has good connectivity.

  14. Jumping jack flash

    Potential 40K of super per household will make you eligible for a fair amount of debt at 95%LVR

    Are we 6 months past the inception of the early super access? Yes?

    Thought so. This will continue past April next year. Well played Scotty.

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