RBA: Property to crash 30% if rates held steady

They sure know how to cookie-cut these waffling eggheads at the RBA. There’s not much new here. Interest rates affect house prices yada, yada, yada…

For a central bank that claims to have no interest in controlling house prices, it sure spends a lot of time talking about them.

Thank you for the opportunity to speak today. The property market is something that is always topical in Australia. News coverage and the proverbial barbecue conversations seem to either fret that prices are rising too quickly, or that they are falling. The other popular topic in the news – particularly at the moment – is interest rates. Perhaps not surprisingly, there are important connections between property prices and interest rates (Graph 1).

Graph 1: Interest Rates and Housing Prices — Graph 1

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:

$24.99 / month

$249 / year

Cancel at any time through our billing provider, Stripe

Share

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.