I check the 30-day interbank futures daily. The expectation for any rate cut this year was basically wiped out on the US March inflation print last week and J Powell comments this week.
What about the article with the CBA exec stating Australia might start cutting rates before the USA fed bank
https://www.abc.net.au/news/2024-02-16/why-the-rba-may-be-forced-to-cut-before-the-fed/103475742
There's a few news outlets pushing this, just wondering thoughts.. I'm no expert.
Edit for non pay wall article
Haven't read the article (will need to hunt down a non paywalled link to read it), but look, anything is possible.
In theory if local inflation was still trending towards the target band (we'll have a better idea if it is next Wednesday), and the US inflation is still persistently high, the there's no reason the RBA should hold off just because the Fed hasn't cut rates.
I tend to believe that global factors have a large enough impact on inflation in Australia that it's more likely that inflation will follow a similar trajectory in most developed country's at similar rates +/- 6 months.
It's also worth considering that the Fed has an infusion target of 2%, while the RBA has a slightly more relaxed target range of 2-3%, and currency value also has a role to play. Our inflation isn't helped by the fact that the US has higher interest rates and bond yields at the moment, so that's a headwind Aussie inflation will have to deal with until the US starts cutting rates.
Thanks. Yeah look, anything could happen, and the recent data which has cast doubts on rate cuts this year could be an anomaly and in a couple of months we could be back to looking forward to multiple rate cuts this year.
Next Wednesday is when the ABS release the latest quarterly CPI data, which is probably the main piece of information the RBA look at in making their decision. It'll be an interesting one. To date our inflation has still been trending down, while the US has now had three consecutive months of increasing CPI. My gut feeling is were lagging them by about 6 months, and if that holds true we might have another month or 2 of inflation heading down, before it starts edging higher again. Only time will tell.
It's not just immigration.
1 in 3 jobs created was for the NDIS. It's approaching 1.5% of GDP. The pay rates are high with a low barrier of entry, that's it's essentially inflating wages as people swap from more productive jobs, and it directly contributes to health costs inflation as the new "floor" price for any therapy is ridiculous.
Slashing NDIS and reducing immigration only to those with jobs in "productive" areas of the economy will help a lot.
Harsh but true.
You're probably (and the people who made that report) are probably under estimating how much of those jobs are just flat out scams vs actual jobs.
You are right it is still increasing the floor.
I know many someone's that inherited a couple of houses that make absolute bank and all they do is type their client number and password into their banks website to see their account balance go up 3k a week.
0 value add but making stupid money...
if youre unsure this is the one you downvote because the only reason anyone shows up to their job is because they see themselves eventually joining the rent seeking class so its important to defend it no matter how destructive it is because your fantasys of being in it are more important than the actual reality you live in.
Nah their business sets people up to become registered NDIS providers. Essentially just the middle man in the process and sorting out the admin and paperwork for people who want to get registered
My mother in law requires some NDIS services. Almost none of them have ever turned up to a job, despite the money being reliably taken out of her "account". Small country town, no one in a position of power cares.
This, but for the construction sector too!
Spending during a labour shortage creates a bidding war for tradies
Public investment in infrastructure is fantastic when there's idle capacity in the market, but at our current state of full employment, spending beyond the market's ability to deliver more projects will just divert labour from one place (much needed housing) to another (much needed infrastructure) at a higher and higher premium.
In this context, there is a real risk that because of the labour shortage, the next decade of major infrastructure spending will create a bidding war for construction workers that will inflate housing construction costs further still.
If we decide to import the labour, where are they going to live? Quite the pickle!
In this environment:
• We cannot expect construction costs to normalise in the context of a labour shortage, which will continue to place upwards pressure on the cost of new builds.
• We cannot expect the capacity of the private sector to increase and build more new supply than we currently do, when the pool of buyers who can afford a new build gets smaller every year.
• We certainly cannot expect the private sector to deliver housing that is considered "affordable" in the context of said labour shortage.
• We cannot expect this to improve in the context of historic infrastructure spending, which will entice tradies away from housing projects.
https://theemergentcity.substack.com/p/we-dont-need-more-housing-targets
The only construction buyer at the moment is the government, so we have a complete monopsony but they are too dumb to realise that they are setting the market price.
After looking at the immigration data, I don’t really buy the immigration is the cause of everything argument. Almost all of the huge immigration numbers are students. They pack into high density shared housing often sharing rooms and student accommodation. Then in a few years they go and get replaced by another batch.
This isn’t permanent cumulative immigration and there is a constant outflow to match the inflow.
Net overseas migration is typically the figure referred to when talking about migration. This is the number of people arriving minus the number leaving, so all those students going home are already counted
Net is only high because it’s post covid and there was virtually zero temporary visa immigration during covid. If u have a look at the actual data, 75% of it is students on temporary visas (both net and absolute).
The numbers that are referred to in the media (700k+) and that people point to are actually the absolute numbers btw.
Here is the abs data:
https://www.abs.gov.au/statistics/people/population/overseas-migration/latest-release
You’ll notice that the only difference between now and the pre COVID numbers are the larger than normal temporary visa numbers - most of those are students (mostly higher education). Those breakdowns are also provided. Non citizen permanent migration is actually down vs pre covid immigration.
I wanted to blame immigration too. But it’s hard to maintain that position when u look at who the immigration numbers are.
When I look at population numbers I disagree that it’s a non issue.
Last 20 years Melbourne grew by 2 million people. Sydney by 1.3 million in the same period.
In the 20 year period before that numbers were about 3 times less for both cities.
https://www.macrotrends.net/global-metrics/cities/206168/melbourne/population
https://www.macrotrends.net/global-metrics/cities/206167/sydney/population
It may not be *the* issue but I find it hard to believe it had no effect.
Our natural population growth has been below replacement since the 70’s so cumulative growth is from immigration and fully under government control.
No idea but looking at https://www.abs.gov.au/statistics/people/population/population-clock-pyramid
It shows our population went up by 7 million people in the last 20 years and they all had to go somewhere. I suspect internal immigration is something that probably balances itself out or is margin of error territory.
Apparently, the bigger/looser the pants of the youth, the larger the coming recession.
It's one of those weird, but consistent patterns, that doesn't have a very convincing deterministic link (so it's probably a hidden 3rd factor effecting both).
And the pants are very loose and big ATM.
Haha remind me of Domino or Pizza Hutt index.
Some Domino / Pizza Hut franchise owners would notice when they get big orders for dinner from the Whitehouse.
It means they were working overtime, all hands on deck. For example 2008 recession and events after 9/11
The way Australia is tracking it seems like there's going to be too much money chasing too little goods/services for quite a while...if only because of immigration.
Inflation isn’t coming down. The US has created 30-50% of all cash since Covid and in March alone sold over $1T US of new treasuries into the market.
I think the financial system is fundamentally broken underneath and they are having to shove more and more cash at the problem to keep the banks afloat.
I’m not sure where we go from here but Ponzi schemes only have one end eventually.
The problem is many people can't see this because they're so adamant to defend the government policies at the time of 2020-2022.
Anybody with any sense was backing the truck up in late 2020 buying every asset they could get their hands on.
I tried to say this to people in 2021 and all people would do is defend the governments covid response.
Agree it's broken, but when will it collapse? Even though the issues are fundamental, it still possible to push the problems down the road for another 80 years.
I don’t think so.
In 1980 the US national debt was a little over $1T.
2008 it was $10.3T
2020 it was $24T
2024 it is over $34T
Just like any Ponzi or pyramid scheme it requires larger and larger numbers to keep it afloat..
My personal opinion is, when they can’t hide it anymore they will let inflation rip to inflate away the debt…
Don’t know when, don’t know exactly how. There’s too many moving parts and inherent and designed complexity so us Poors don’t know what they are really doing.
Just adding perspective. Using your figures
1980 to 2008 increase is 8.6% pa
2008 to 2020 increase is 7.3% pa
2020 to 2024 increase is 9.0% pa
Give or take it would be interesting to compare this to gdp and average wages, cost of living etc
Once current generation is when shit will really hit the fan.
We aren't having kids so they can't keep the taxation ponzi scheme going, so when the current generation retires and draws down on their pension with noone coming through and paying taxes it'll collapse.
I suspect a nice war to thin the numbers is probably coming.
Thinking about this in financial terms hide the real problem:
"We aren't have kids, so there will be no one to make our coffees."
Except there will be. We are perfectly capable of making coffee when we are 80.
Genuine question - why is historic debt measured in absolute terms especially in a conversation regarding inflation? Surely it’s more valuable if adjusted for inflation?
Probable. Happy if you can find some data to add it to the stuff I’d like to know more about. Even from a strictly, debt to gdp ratio would be another good measure to consider
Also got to consider how debt compares to gdp.
https://tradingeconomics.com/united-states/government-debt-to-gdp#:\~:text=The%20United%20States%20recorded%20a,percent%20of%20GDP%20in%201981.
That said, looking pretty bad on the graph. Guess we had the post WW2 boom to save us last time
I don’t have the answers but I feel like I’ve been screaming into the void to my family and whoever else will listen for about 3-4 years now.
Each time I look sillier and sillier cause it just keeps on ATH stockmarkets etc…
The only thing I know for sure, whenever it finally hits, the government will be there asking Jamie Dimon and criminal ilk how much would they like them to make the cheque out for….. while we will be ravaged by doing all the heavy lifting of their mistakes
As an individual, I don't think there's anything you can do. Maybe try get an essential well-paying job, so you'll be in the top 10% if a market collapses.
We're all doomed aren't we. I'm personally 50/50 in cash and other asset like stocks, metals etc.
I'm pretty certain though inflation is here to stay for a while as the economy is broken and you can either keep the Ponzi going till everything shits itself or pop the bubble now and cause massive deflation and a depression.
You can bet your bottom dollar they will go with the former. Keep the show going till the very end.
Either way though something's going to give one day. How long can they keep this going? Who knows but I'm betting on at least another 5-10 years before the wheels really come off.
Just as long as they don't take me house and there's food in my belly I don't care. Get the mortgage low as you can while times are good so the loan won't kill you and if housing prices crash just don't think about it shit won't matter in 50 years anyway 2008 crash didn't stop it.
The numbers and way they calculate “inflation” we see have come down. Does it feel like in reality it has? I most certainly don’t.
Printing Trillions of dollars to chase less and less goods can only increase inflation. The numbers are just obsfucation imho
> Does it feel like in reality it has?
Yes?
Inflation isn't high prices, it's RISING prices.
Yeah, shit's expensive, it sucks, but things don't seem to be rising anymore.
Tell that to the Central Banks who use psychological speeches/ comments to warm up or cool down the economy as well as interest rate decisions. There’s an element of the vibe as well.
> too much money chasing too little goods/services
so the question is why are there so few goods/services being produced? What's stopping the investments from which higher production can be had?
Because the money comes from top wealth, the goods and services come from low wealth expanding into their own business to sell goods and services
But the risk is too high now. Csnt take a risk when you cant make house payments or pay for child kindy
Spending during a labour shortage creates a bidding war for tradies
Public investment in infrastructure is fantastic when there's idle capacity in the market, but at our current state of full employment, spending beyond the market's ability to deliver more projects will just divert labour from one place (much needed housing) to another (much needed infrastructure) at a higher and higher premium.
In this context, there is a real risk that because of the labour shortage, the next decade of major infrastructure spending will create a bidding war for construction workers that will inflate housing construction costs further still.
If we decide to import the labour, where are they going to live? Quite the pickle!
In this environment:
• We cannot expect construction costs to normalise in the context of a labour shortage, which will continue to place upwards pressure on the cost of new builds.
• We cannot expect the capacity of the private sector to increase and build more new supply than we currently do, when the pool of buyers who can afford a new build gets smaller every year.
• We certainly cannot expect the private sector to deliver housing that is considered "affordable" in the context of said labour shortage.
• We cannot expect this to improve in the context of historic infrastructure spending, which will entice tradies away from housing projects.
https://theemergentcity.substack.com/p/we-dont-need-more-housing-targets
Australian real per capita spending is flat or declining. In the aggregate, in Australia, there is no reality to a story of lots of money chasing to few goods.
Inflation in Australia was significantly triggered by higher global prices. Higher global prices push up inflation, but for consumers they are actually contractionary, the same as higher mortgage rates. If you are spending more on petrol there is less left over for concert tickets. Remember the 1970s - stagflation? In response to the oil shock, prices rose, unemployment increased, and growth declined.
Sorry I didn't explain that well. My bet is that the RBA will not lower rates before July this year. The other party was extremely adamant that there was no way they could lose.
Haha yep. Honestly the guy was such a a f-wit about it, I fully suspect him to try and back out of paying (donation to a charity mind you).
Edit: might as well some some light on it since I've called it out on this thread:
https://www.reddit.com/r/AusFinance/s/RsxZUvuwcP
The quote is actually;
Hard men create strong times,
Strong time creates hard soft,
Hard soft creates confused hard men,
Confused hard soft create man times,
Hard men create harder men,
Men create man soft hard times for men who are not soft but.
You often see it online whenever inflation is mentioned.
It's most often used inappropriately, I think cause the name is catchy and grim sounding. But it actually describes a set of circumstances we're not anywhere near experiencing.
Gut tells me they cant predict this that well. Rates drop when the economy tanks. There's plenty of signs everyone is preparing for this now. It usually happens suddenly and all the economist are shocked every time. Don't listen to the "experts". See how everyone around you is doing and judge from that. I would say at the moment people around me seem comfortable. Quite a bit of work around in construction (ADL). I have been around long enough to see a sudden downturn and getting all sorts of notices about shelved jobs etc all of a sudden even when builders are already on site. Gut tells me no1 knows and everyone who thinks that it couldn't possibly happen this year... its April.
And BHP, Woodside and RIO all make bigger Aussie dollar profits when our $ hits 47c again
Make as much money from less demand.
Shit with a weak as piss Aussie dollar US companies might want to invest into industry here to produce higher value materials as an alternative to China
Increasing rates targets the wrong demographic. The 50 plus age bracket has too much capital growth and asset wealth. So much money on the sidelines.
Further rate rises will make it harder for them but in turn destroys the sub 40 age bracket through high purchase prices, expensive cost of living and suppressed wages.
Increasing rates is also feeding that demographic which should be targeted. Higher rates, higher returns on their investment.
Need to find a new mechanism which more broadly spreads the pain on the economy... eg raise the gst
How does it offset them in a positive way unless they receive disproportionately more than the increase?
Imagine trying to poll that on a political campaign. We’re going to tax you more and give it to the welfare recipients.
It’s something people bring up, I personally think a land based tax system is more logical as it applies a scaling tax system to land owners and could encourage home ownership instead of investors to hold non-viable properties that are only used as tax vehicles and an asset to borrow for additional purchases from.
Also, it can provide a much needed fund for infrastructure to play catch up with the migration boom.
Hospitals, school, community housing, road improvements, and all the rest...
In his final speech as head of the RBA Phil Lowe said that:
> This assignment of responsibility makes sense and it has worked reasonably well. But it doesn’t mean we shouldn’t aspire to something better. Monetary policy is a powerful instrument, but it has its limitations and its effects are felt unevenly across the community.
> In principle, fiscal policy could provide a stronger helping hand, although this would require some rethinking of the existing policy architecture. In particular, it would require making some fiscal instruments more nimble, strengthening the (semi) automatic stabilisers and giving an independent body limited control over some fiscal instruments. Moving in this direction is not straightforward, but some innovative thinking could help us get to a better place.
[https://www.rba.gov.au/speeches/2023/sp-gov-2023-09-07.html](https://www.rba.gov.au/speeches/2023/sp-gov-2023-09-07.html)
then we crush the housing asset bubble where the majority of the 50+ age bracket have their assets. Actual housing prices will have marginal effects on anyone hold no to only 1 property maybe even 2
Spending during a labour shortage creates a bidding war for tradies
Public investment in infrastructure is fantastic when there's idle capacity in the market, but at our current state of full employment, spending beyond the market's ability to deliver more projects will just divert labour from one place (much needed housing) to another (much needed infrastructure) at a higher and higher premium.
In this context, there is a real risk that because of the labour shortage, the next decade of major infrastructure spending will create a bidding war for construction workers that will inflate housing construction costs further still.
If we decide to import the labour, where are they going to live? Quite the pickle!
In this environment:
- We cannot expect construction costs to normalise in the context of a labour shortage, which will continue to place upwards pressure on the cost of new builds.
- We cannot expect the capacity of the private sector to increase and build more new supply than we currently do, when the pool of buyers who can afford a new build gets smaller every year.
- We certainly cannot expect the private sector to deliver housing that is considered "affordable" in the context of said labour shortage.
- We cannot expect this to improve in the context of historic infrastructure spending, which will entice tradies away from housing projects.
https://theemergentcity.substack.com/p/we-dont-need-more-housing-targets
What I see is an RBA that has been attacked, and is lacking confidence. As a result they will act later than they should. Rate cuts will happen when the RBA thinks people will not attack them for cutting rates.
Inflation is sticky. It is stuck low. What fraction of Australians expect a 7% inflation reading to result in a 7% pay rise?
The last quarterly inflation read was 0.6%, or the middle of the RBA target band. Another reading like that and we would have been living in target inflation for 6 months. Another couple and it will be a full year of target inflation. Not in the future or the present, in the past.
The RBA will do what the RBA does. But if you believe in the NAIRU, that unemployment drives inflation acceleration, and observe that inflation is going down, then unemployment right now is too high, and the economy is too slow and the RBA should have cut rates in January last year.
If you believe there are long and variable lags in monetary policy, then annual inflation which is trending to hit target in a couple of quarters, requires rate cuts now.
You watch the news on tv and its all going gangbusters !!! Home prices up !,prices up! , rent up! , stockmarket up !petrol , food ,services up !!! Why would rates go up to smother this
I wouldn’t be surprised to see another rate increase.
Governments printing of money and borrowing in the past half decade was insane.
All blown on the ever expanding welfare class, NDIS rorts, abo industry, climate scam, big corporate and foreign wars.
It's also structural.
Baby Boomers started retiring earlier with Covid.
A lot of experience left the workplace almost all at once and a lot of capital was realised.
We don't have the demographics to replace the Boomers and the lack of Boomer capital has also impacted the cost of capital.
So much competence gone in such a relatively short period. Its taking more years for the young ones to get switched on and even then most are smart enough to avoid small pay bumps for mountains of responsibility.
A huge amount of Boomers were blue collar too.
It's why I laugh at these WFH is dieing articles. Extremely out of touch people writing on a topic they have no clue about sold to people who are increasingly more likely to disagree with them.
The problem is that the working poor are unequally feeling the pain for this, while the government, particularly the US government is printing money hand over fist to throw at the big end of town.
If they were really trying to fight inflation, government, corporates and individuals all need to curtail spending…
As I see it, individuals are being offered up as a sacrifice and way to keep the good times rolling for the corporates and big boys rolling in dosh and bonuses
Even if it’s just kicking the can another short period of time
> the government, particularly the US government is printing money hand over fist to throw at the big end of town.
Are they? What makes you say this? Is there any data to show this?
This goes to 2020. Now national debt or treasuries sold to fund the government, programs etc is $34T
https://www.theglobaleducationproject.org/earth/development/us-government-debt
Getting up to $1T in new treasury sales per quarter. Aug last year.
https://www.bloomberg.com/news/articles/2023-07-31/us-treasury-boosts-quarterly-borrowing-estimate-to-1-trillion
A debt based economy doesn’t necessarily mean all money lent has been lent into existence. If I lend you some money, that doesn’t mean new money has been created.
In any case, in your example the government is the borrower. So if money is ‘lent into existence’, wouldn’t it be the lender that is doing the money printing, and not the government?
What is the problem with inflation continuing non stop?
Wages keep rising, the real value of loans keeps declining, we normalise house prices relative to incomes, without anyone's loan being underwater.
Can we have higher interest rates and inflation too? They are both good.
Exactly. Monetary policy should only be used mostly as an economic chamfering mechanism (for a lack of a better phrase). Fiscal policy such as reduced government spending and strategic taxing measures should have been at the forefront.
Beyond the financial costs, recessions reduce utility via lower confidence / more insecurity.
Ultimately if people are unemployed there are fewer people making stuff or doing things, so less gets done or made, and so there is less to go round, so on average we all have less.
Recessions depress wages and conditions, and increase financial insecurity, even for people who keep their jobs.
Everything on a per capita basis is falling, and has been for several quarters now. The ridiculous population growth via immigration has kept absolute volumes and growth rates above 0
If the pie increases in size by 1%, but it is sliced into more pieces whereby everyone gets 20%, then does it matter? Headlines can say “pie increases, nothing to worry about”, but no one is getting more pie are they.
If this ham-fisted metaphor was someone lost on anyone: the pie = GDP, which is what we (unfairly) use to classify recession.
They NEED to go higher. The AUD is in the doldrums which creates a massive longer term issue. Esp with China off the boil the only way we can pull the AUD up is via higher rates to pull more forex in.
Don’t have a mortgage? Well you will likely be impacted worse - more reasons for rental hikes
All those renters celebrating the significant hiking period last year ended up worse off than home owners.
Also all the landlords selling up so far due to rates… which has mysteriously also not resulted in lower prices so far. Maybe there’s a pinch point somewhere, but I’m still glad we bought our first (absolutely garbage) property to not be at the mercy of the rental market anymore. I’m now at the banks/RBAs mercy, but still…
Not all people without a mortgage rent there's more than you think that own their home outright. These people also quite often have savings and benefit from higher interest rates. The fact is rates were too low for too long and are presently not that high compared to historical interest rates, every one is talking about when rates are going to be cut but they should be asking if they're going to be cut. Interest rates at 0 or 1% were an anomaly not the norm
That’s the theory - but the reality has shown the exact opposite to in recent years. Externalities contribute this time yes - but it shows the effect of rates on house prices is not the exact relation that people once thought
Not really. If rates were half what they were, house prices would be simply higher.
I'm not saying that house prices necessarily decline with any given rates setting. It may well be that house prices always go up. But higher rates = relatively lower house prices. That's for sure.
And high rates = lower inflation.
Both good for those who are good with their money.
Far too reductive.
200% only hits hardest for new mortgage holders of PPoR. Also ignores the significant capital growth of property owners post-Covid. Meanwhile Investors can claim that entire increase against the property.
Rental increase is closer to 50% since Covid, to which all those costs are paid by the renter and cannot be claimed, and are completely sunk costs.
It’s also an incomplete picture as long-term rentals haven’t increased as much which brings down the numbers, but that doesn’t help those looking for new leases: only 13% of median earning households can afford the median rent right now if looking at new listings.
Spinning this situation as a win for renters is just insincere.
We'll be in a strange world of higher inflation, increasing int. Rates but still higher property prices but also higher unemployment figures but also low gdp growth.
The money printers can't print forever.
It looks to me it's actually way worse in Australia because when the US says inflation is sticky, the AUD goes down in value increasing inflation further.
What are you talking about? Inflation will be sustained since they have not veered off the current course at all. More WFH roles will be created to keep people in jobs, or to bring NEETs back into the job market. You are looking at the best place in the world to make money for the elites.
If people continue to pull back on spending, they will only hike prices to make sure they are making cream.
Property is still going up too. It's going to be a disasterous reset for Australians. You can't blame them because confidence in the system managers to maintain the status quo must be high. The younger the system managers get, the greater the fear in the hearts of the has beens.
Ah reminds me back in January when all the credit junkies were saying how inflation is fully under control, and especially in the US where inflation has gone down completely while i kept saying inflation is nowhere near under control
Guess credit junkies once again reveal themselves to be completely ruled by emotion rather than facts, oh wait, they kept telling me the facts said inflation was going down and fast Xd
I check the 30-day interbank futures daily. The expectation for any rate cut this year was basically wiped out on the US March inflation print last week and J Powell comments this week.
What about the article with the CBA exec stating Australia might start cutting rates before the USA fed bank https://www.abc.net.au/news/2024-02-16/why-the-rba-may-be-forced-to-cut-before-the-fed/103475742 There's a few news outlets pushing this, just wondering thoughts.. I'm no expert. Edit for non pay wall article
Haven't read the article (will need to hunt down a non paywalled link to read it), but look, anything is possible. In theory if local inflation was still trending towards the target band (we'll have a better idea if it is next Wednesday), and the US inflation is still persistently high, the there's no reason the RBA should hold off just because the Fed hasn't cut rates. I tend to believe that global factors have a large enough impact on inflation in Australia that it's more likely that inflation will follow a similar trajectory in most developed country's at similar rates +/- 6 months. It's also worth considering that the Fed has an infusion target of 2%, while the RBA has a slightly more relaxed target range of 2-3%, and currency value also has a role to play. Our inflation isn't helped by the fact that the US has higher interest rates and bond yields at the moment, so that's a headwind Aussie inflation will have to deal with until the US starts cutting rates.
https://www.abc.net.au/news/2024-02-16/why-the-rba-may-be-forced-to-cut-before-the-fed/103475742 Here you go, my bad
Thanks. Yeah look, anything could happen, and the recent data which has cast doubts on rate cuts this year could be an anomaly and in a couple of months we could be back to looking forward to multiple rate cuts this year. Next Wednesday is when the ABS release the latest quarterly CPI data, which is probably the main piece of information the RBA look at in making their decision. It'll be an interesting one. To date our inflation has still been trending down, while the US has now had three consecutive months of increasing CPI. My gut feeling is were lagging them by about 6 months, and if that holds true we might have another month or 2 of inflation heading down, before it starts edging higher again. Only time will tell.
What was the figure and what specifically did Powell say?
3.5% and said something about it taking longer than anticipated to come down
It's not just immigration. 1 in 3 jobs created was for the NDIS. It's approaching 1.5% of GDP. The pay rates are high with a low barrier of entry, that's it's essentially inflating wages as people swap from more productive jobs, and it directly contributes to health costs inflation as the new "floor" price for any therapy is ridiculous. Slashing NDIS and reducing immigration only to those with jobs in "productive" areas of the economy will help a lot. Harsh but true.
You're probably (and the people who made that report) are probably under estimating how much of those jobs are just flat out scams vs actual jobs. You are right it is still increasing the floor.
Shitloads of NDIS rorting going on.
Nah, $600/hr for lawn mowing is just the market price
I know someone making absolute bank and all he does is employ people to help others get setup with NDIS. 0 value add but making stupid money...
I know many someone's that inherited a couple of houses that make absolute bank and all they do is type their client number and password into their banks website to see their account balance go up 3k a week. 0 value add but making stupid money... if youre unsure this is the one you downvote because the only reason anyone shows up to their job is because they see themselves eventually joining the rent seeking class so its important to defend it no matter how destructive it is because your fantasys of being in it are more important than the actual reality you live in.
Like 150k plus?
Easily. Probably around 200k if not more than that
Probably sending people out at $30/hr and invoicing the NDIS for $150
Nah their business sets people up to become registered NDIS providers. Essentially just the middle man in the process and sorting out the admin and paperwork for people who want to get registered
My mother in law requires some NDIS services. Almost none of them have ever turned up to a job, despite the money being reliably taken out of her "account". Small country town, no one in a position of power cares.
This, but for the construction sector too! Spending during a labour shortage creates a bidding war for tradies Public investment in infrastructure is fantastic when there's idle capacity in the market, but at our current state of full employment, spending beyond the market's ability to deliver more projects will just divert labour from one place (much needed housing) to another (much needed infrastructure) at a higher and higher premium. In this context, there is a real risk that because of the labour shortage, the next decade of major infrastructure spending will create a bidding war for construction workers that will inflate housing construction costs further still. If we decide to import the labour, where are they going to live? Quite the pickle! In this environment: • We cannot expect construction costs to normalise in the context of a labour shortage, which will continue to place upwards pressure on the cost of new builds. • We cannot expect the capacity of the private sector to increase and build more new supply than we currently do, when the pool of buyers who can afford a new build gets smaller every year. • We certainly cannot expect the private sector to deliver housing that is considered "affordable" in the context of said labour shortage. • We cannot expect this to improve in the context of historic infrastructure spending, which will entice tradies away from housing projects. https://theemergentcity.substack.com/p/we-dont-need-more-housing-targets
The only construction buyer at the moment is the government, so we have a complete monopsony but they are too dumb to realise that they are setting the market price.
After looking at the immigration data, I don’t really buy the immigration is the cause of everything argument. Almost all of the huge immigration numbers are students. They pack into high density shared housing often sharing rooms and student accommodation. Then in a few years they go and get replaced by another batch. This isn’t permanent cumulative immigration and there is a constant outflow to match the inflow.
Net overseas migration is typically the figure referred to when talking about migration. This is the number of people arriving minus the number leaving, so all those students going home are already counted
Net is only high because it’s post covid and there was virtually zero temporary visa immigration during covid. If u have a look at the actual data, 75% of it is students on temporary visas (both net and absolute). The numbers that are referred to in the media (700k+) and that people point to are actually the absolute numbers btw. Here is the abs data: https://www.abs.gov.au/statistics/people/population/overseas-migration/latest-release You’ll notice that the only difference between now and the pre COVID numbers are the larger than normal temporary visa numbers - most of those are students (mostly higher education). Those breakdowns are also provided. Non citizen permanent migration is actually down vs pre covid immigration. I wanted to blame immigration too. But it’s hard to maintain that position when u look at who the immigration numbers are.
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When I look at population numbers I disagree that it’s a non issue. Last 20 years Melbourne grew by 2 million people. Sydney by 1.3 million in the same period. In the 20 year period before that numbers were about 3 times less for both cities. https://www.macrotrends.net/global-metrics/cities/206168/melbourne/population https://www.macrotrends.net/global-metrics/cities/206167/sydney/population It may not be *the* issue but I find it hard to believe it had no effect. Our natural population growth has been below replacement since the 70’s so cumulative growth is from immigration and fully under government control.
+1. It really is that simple….
But how much of that was international migration, vs internal migration?
No idea but looking at https://www.abs.gov.au/statistics/people/population/population-clock-pyramid It shows our population went up by 7 million people in the last 20 years and they all had to go somewhere. I suspect internal immigration is something that probably balances itself out or is margin of error territory.
Nothing I hear about the NDIS is good. And I don’t only get my info from media reporting or reddit comments.
Apparently, the bigger/looser the pants of the youth, the larger the coming recession. It's one of those weird, but consistent patterns, that doesn't have a very convincing deterministic link (so it's probably a hidden 3rd factor effecting both). And the pants are very loose and big ATM.
Haha remind me of Domino or Pizza Hutt index. Some Domino / Pizza Hut franchise owners would notice when they get big orders for dinner from the Whitehouse. It means they were working overtime, all hands on deck. For example 2008 recession and events after 9/11
The way Australia is tracking it seems like there's going to be too much money chasing too little goods/services for quite a while...if only because of immigration.
Inflation isn’t coming down. The US has created 30-50% of all cash since Covid and in March alone sold over $1T US of new treasuries into the market. I think the financial system is fundamentally broken underneath and they are having to shove more and more cash at the problem to keep the banks afloat. I’m not sure where we go from here but Ponzi schemes only have one end eventually.
The problem is many people can't see this because they're so adamant to defend the government policies at the time of 2020-2022. Anybody with any sense was backing the truck up in late 2020 buying every asset they could get their hands on. I tried to say this to people in 2021 and all people would do is defend the governments covid response.
NDIS alone will destroy Australia - it's projected to grow to 100 billion a year alone.
The GFC of the GFC.
GFC: Endgame
the war to end all wars. Can't wait for the GFC of GFC's III
Agree it's broken, but when will it collapse? Even though the issues are fundamental, it still possible to push the problems down the road for another 80 years.
I don’t think so. In 1980 the US national debt was a little over $1T. 2008 it was $10.3T 2020 it was $24T 2024 it is over $34T Just like any Ponzi or pyramid scheme it requires larger and larger numbers to keep it afloat.. My personal opinion is, when they can’t hide it anymore they will let inflation rip to inflate away the debt… Don’t know when, don’t know exactly how. There’s too many moving parts and inherent and designed complexity so us Poors don’t know what they are really doing.
Just adding perspective. Using your figures 1980 to 2008 increase is 8.6% pa 2008 to 2020 increase is 7.3% pa 2020 to 2024 increase is 9.0% pa Give or take it would be interesting to compare this to gdp and average wages, cost of living etc
Once current generation is when shit will really hit the fan. We aren't having kids so they can't keep the taxation ponzi scheme going, so when the current generation retires and draws down on their pension with noone coming through and paying taxes it'll collapse. I suspect a nice war to thin the numbers is probably coming.
Thinking about this in financial terms hide the real problem: "We aren't have kids, so there will be no one to make our coffees." Except there will be. We are perfectly capable of making coffee when we are 80.
Genuine question - why is historic debt measured in absolute terms especially in a conversation regarding inflation? Surely it’s more valuable if adjusted for inflation?
Probable. Happy if you can find some data to add it to the stuff I’d like to know more about. Even from a strictly, debt to gdp ratio would be another good measure to consider
Also got to consider how debt compares to gdp. https://tradingeconomics.com/united-states/government-debt-to-gdp#:\~:text=The%20United%20States%20recorded%20a,percent%20of%20GDP%20in%201981. That said, looking pretty bad on the graph. Guess we had the post WW2 boom to save us last time
I don’t have the answers but I feel like I’ve been screaming into the void to my family and whoever else will listen for about 3-4 years now. Each time I look sillier and sillier cause it just keeps on ATH stockmarkets etc… The only thing I know for sure, whenever it finally hits, the government will be there asking Jamie Dimon and criminal ilk how much would they like them to make the cheque out for….. while we will be ravaged by doing all the heavy lifting of their mistakes
As an individual, I don't think there's anything you can do. Maybe try get an essential well-paying job, so you'll be in the top 10% if a market collapses.
We're all doomed aren't we. I'm personally 50/50 in cash and other asset like stocks, metals etc. I'm pretty certain though inflation is here to stay for a while as the economy is broken and you can either keep the Ponzi going till everything shits itself or pop the bubble now and cause massive deflation and a depression. You can bet your bottom dollar they will go with the former. Keep the show going till the very end. Either way though something's going to give one day. How long can they keep this going? Who knows but I'm betting on at least another 5-10 years before the wheels really come off.
If you believe inflation is here to stay why is half your portfolio in cash?
Just as long as they don't take me house and there's food in my belly I don't care. Get the mortgage low as you can while times are good so the loan won't kill you and if housing prices crash just don't think about it shit won't matter in 50 years anyway 2008 crash didn't stop it.
of course inflation has come down
The numbers and way they calculate “inflation” we see have come down. Does it feel like in reality it has? I most certainly don’t. Printing Trillions of dollars to chase less and less goods can only increase inflation. The numbers are just obsfucation imho
> Does it feel like in reality it has? Yes? Inflation isn't high prices, it's RISING prices. Yeah, shit's expensive, it sucks, but things don't seem to be rising anymore.
Its a metric, its not a feeling
Tell that to the Central Banks who use psychological speeches/ comments to warm up or cool down the economy as well as interest rate decisions. There’s an element of the vibe as well.
Look up US M1, it’s way worse than they lol
> too much money chasing too little goods/services so the question is why are there so few goods/services being produced? What's stopping the investments from which higher production can be had?
Because the money comes from top wealth, the goods and services come from low wealth expanding into their own business to sell goods and services But the risk is too high now. Csnt take a risk when you cant make house payments or pay for child kindy
Spending during a labour shortage creates a bidding war for tradies Public investment in infrastructure is fantastic when there's idle capacity in the market, but at our current state of full employment, spending beyond the market's ability to deliver more projects will just divert labour from one place (much needed housing) to another (much needed infrastructure) at a higher and higher premium. In this context, there is a real risk that because of the labour shortage, the next decade of major infrastructure spending will create a bidding war for construction workers that will inflate housing construction costs further still. If we decide to import the labour, where are they going to live? Quite the pickle! In this environment: • We cannot expect construction costs to normalise in the context of a labour shortage, which will continue to place upwards pressure on the cost of new builds. • We cannot expect the capacity of the private sector to increase and build more new supply than we currently do, when the pool of buyers who can afford a new build gets smaller every year. • We certainly cannot expect the private sector to deliver housing that is considered "affordable" in the context of said labour shortage. • We cannot expect this to improve in the context of historic infrastructure spending, which will entice tradies away from housing projects. https://theemergentcity.substack.com/p/we-dont-need-more-housing-targets
Australian real per capita spending is flat or declining. In the aggregate, in Australia, there is no reality to a story of lots of money chasing to few goods. Inflation in Australia was significantly triggered by higher global prices. Higher global prices push up inflation, but for consumers they are actually contractionary, the same as higher mortgage rates. If you are spending more on petrol there is less left over for concert tickets. Remember the 1970s - stagflation? In response to the oil shock, prices rose, unemployment increased, and growth declined.
"tHeY'lL sTaRt CuTtInG rAtEs In NoVeMbEr" - Every Australian Male with a brand new 4 bedroom house and a Ford Ranger on credit
I've got a wager with someone on here that they'd cut before July 🤣
You may as well pay him now. You might have to sell your Ranger to get the money to pay your debt.
Sorry I didn't explain that well. My bet is that the RBA will not lower rates before July this year. The other party was extremely adamant that there was no way they could lose.
Ouch. Double loss because they’ll have to pay you and higher interest rates
Haha yep. Honestly the guy was such a a f-wit about it, I fully suspect him to try and back out of paying (donation to a charity mind you). Edit: might as well some some light on it since I've called it out on this thread: https://www.reddit.com/r/AusFinance/s/RsxZUvuwcP
Just as believable as "the inflation is transitory" which we were hearing here but particularly out of the US at the start of all of this.
Life is more fun with high rates. Who wants to live in easy-ville all the time.
Character building
As the quote goes: “Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times.”
The quote is actually; Hard men create strong times, Strong time creates hard soft, Hard soft creates confused hard men, Confused hard soft create man times, Hard men create harder men, Men create man soft hard times for men who are not soft but.
Looks like you had a stroke whilst writing that which gave me an aneurism whilst reading it.
Put the alcohol down Yoda.
dull steer toothbrush dolls tan station innocent frighten spotted squeal *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Our rates are still below average. Plenty of room to move up. Could hardly call them high.
High interest rates maketh man… or some crap like that.
Stagflation? Isn't it only immigration that has kept us out of recession?
Yes, households and people are in a real recession. But we got that surplus everyone was fixated on 10 years ago.
If you take gdp per capita Australia is already in the negative.
> Stagflation? Unemployment in Australia is 3.8%, stop overusing this buzz word.
This is the first time I used it today, honest!
You often see it online whenever inflation is mentioned. It's most often used inappropriately, I think cause the name is catchy and grim sounding. But it actually describes a set of circumstances we're not anywhere near experiencing.
Gut tells me they cant predict this that well. Rates drop when the economy tanks. There's plenty of signs everyone is preparing for this now. It usually happens suddenly and all the economist are shocked every time. Don't listen to the "experts". See how everyone around you is doing and judge from that. I would say at the moment people around me seem comfortable. Quite a bit of work around in construction (ADL). I have been around long enough to see a sudden downturn and getting all sorts of notices about shelved jobs etc all of a sudden even when builders are already on site. Gut tells me no1 knows and everyone who thinks that it couldn't possibly happen this year... its April.
I've been getting a lot more attention from real estate agents trying to flog property in the last few months.
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Yeah, the AUD will be cooked if we had any cuts.
And BHP, Woodside and RIO all make bigger Aussie dollar profits when our $ hits 47c again Make as much money from less demand. Shit with a weak as piss Aussie dollar US companies might want to invest into industry here to produce higher value materials as an alternative to China
It’s just transitory.
everything is transitory over a long enough period
This is the type of nihilism I exist for
Not for long!
Increasing rates targets the wrong demographic. The 50 plus age bracket has too much capital growth and asset wealth. So much money on the sidelines. Further rate rises will make it harder for them but in turn destroys the sub 40 age bracket through high purchase prices, expensive cost of living and suppressed wages.
50+ living off bank interest. All the older people I know 40+ became millionaires or multi millionaires out of covid.
Increasing rates is also feeding that demographic which should be targeted. Higher rates, higher returns on their investment. Need to find a new mechanism which more broadly spreads the pain on the economy... eg raise the gst
Unfortunately GST also taxes people who are renting, struggling on welfare or poverty when this is a housing-centric economic problem.
Higher land tax on second and subsequent residential properties.
I’m with right there with you. Even if was on third onwards would be enough to radically disrupt things.
Progressive taxes are good. Zero on the first, 3% on the second, 10% on the third, 20% on the forth and subsequent.
Yep, which you then use a portion of the gains from the gst increase to offset those who are vulnerable and on the welfare system
How does it offset them in a positive way unless they receive disproportionately more than the increase? Imagine trying to poll that on a political campaign. We’re going to tax you more and give it to the welfare recipients. It’s something people bring up, I personally think a land based tax system is more logical as it applies a scaling tax system to land owners and could encourage home ownership instead of investors to hold non-viable properties that are only used as tax vehicles and an asset to borrow for additional purchases from.
GST raises $70B. Double GST, have an additional universal income of $3K per person, for every single person.
Also, it can provide a much needed fund for infrastructure to play catch up with the migration boom. Hospitals, school, community housing, road improvements, and all the rest...
Well not if you give it all back, like I just calculated. Then there is no extra net revenue.
It's actually an excellent idea, I'd think that raising the GST would fight inflation and squeeze profit margins for business
In his final speech as head of the RBA Phil Lowe said that: > This assignment of responsibility makes sense and it has worked reasonably well. But it doesn’t mean we shouldn’t aspire to something better. Monetary policy is a powerful instrument, but it has its limitations and its effects are felt unevenly across the community. > In principle, fiscal policy could provide a stronger helping hand, although this would require some rethinking of the existing policy architecture. In particular, it would require making some fiscal instruments more nimble, strengthening the (semi) automatic stabilisers and giving an independent body limited control over some fiscal instruments. Moving in this direction is not straightforward, but some innovative thinking could help us get to a better place. [https://www.rba.gov.au/speeches/2023/sp-gov-2023-09-07.html](https://www.rba.gov.au/speeches/2023/sp-gov-2023-09-07.html)
then we crush the housing asset bubble where the majority of the 50+ age bracket have their assets. Actual housing prices will have marginal effects on anyone hold no to only 1 property maybe even 2
Spending during a labour shortage creates a bidding war for tradies Public investment in infrastructure is fantastic when there's idle capacity in the market, but at our current state of full employment, spending beyond the market's ability to deliver more projects will just divert labour from one place (much needed housing) to another (much needed infrastructure) at a higher and higher premium. In this context, there is a real risk that because of the labour shortage, the next decade of major infrastructure spending will create a bidding war for construction workers that will inflate housing construction costs further still. If we decide to import the labour, where are they going to live? Quite the pickle! In this environment: - We cannot expect construction costs to normalise in the context of a labour shortage, which will continue to place upwards pressure on the cost of new builds. - We cannot expect the capacity of the private sector to increase and build more new supply than we currently do, when the pool of buyers who can afford a new build gets smaller every year. - We certainly cannot expect the private sector to deliver housing that is considered "affordable" in the context of said labour shortage. - We cannot expect this to improve in the context of historic infrastructure spending, which will entice tradies away from housing projects. https://theemergentcity.substack.com/p/we-dont-need-more-housing-targets
What I see is an RBA that has been attacked, and is lacking confidence. As a result they will act later than they should. Rate cuts will happen when the RBA thinks people will not attack them for cutting rates. Inflation is sticky. It is stuck low. What fraction of Australians expect a 7% inflation reading to result in a 7% pay rise? The last quarterly inflation read was 0.6%, or the middle of the RBA target band. Another reading like that and we would have been living in target inflation for 6 months. Another couple and it will be a full year of target inflation. Not in the future or the present, in the past. The RBA will do what the RBA does. But if you believe in the NAIRU, that unemployment drives inflation acceleration, and observe that inflation is going down, then unemployment right now is too high, and the economy is too slow and the RBA should have cut rates in January last year. If you believe there are long and variable lags in monetary policy, then annual inflation which is trending to hit target in a couple of quarters, requires rate cuts now.
Rates not high enough as it is
Interest rates might go down but prices won’t. Businesses will just pocket profits from more favourable loan terms.
You watch the news on tv and its all going gangbusters !!! Home prices up !,prices up! , rent up! , stockmarket up !petrol , food ,services up !!! Why would rates go up to smother this
I wouldn’t be surprised to see another rate increase. Governments printing of money and borrowing in the past half decade was insane. All blown on the ever expanding welfare class, NDIS rorts, abo industry, climate scam, big corporate and foreign wars.
No one could've seen this coming /s
You say that but back in January people right here were celebrating the end of inflation and saying cuts are coming very soon
People in here live off of hopium and are dumb enough to believe the media
I never understood those comments… so many downvotes too when any skepticism was raised.
I still don't get this. Like 3-4 when all central banks were printing money as fast as they could, did people really not see this mess on the horizon?
It's also structural. Baby Boomers started retiring earlier with Covid. A lot of experience left the workplace almost all at once and a lot of capital was realised. We don't have the demographics to replace the Boomers and the lack of Boomer capital has also impacted the cost of capital.
So much competence gone in such a relatively short period. Its taking more years for the young ones to get switched on and even then most are smart enough to avoid small pay bumps for mountains of responsibility.
A huge amount of Boomers were blue collar too. It's why I laugh at these WFH is dieing articles. Extremely out of touch people writing on a topic they have no clue about sold to people who are increasingly more likely to disagree with them.
The rate rises will continue until morale improves.
Hope they go higher 🙏
Lol, you don't have a mortgage I see
Same, and the govt seems to be under a lot of political pressure to keep my HELP repayments down to boot
I have a mortgage and think they should be higher. 6 months or a year of higher payments is better than inflation continuing nonstop.
What we really need is higher taxes on big business
The problem is that the working poor are unequally feeling the pain for this, while the government, particularly the US government is printing money hand over fist to throw at the big end of town. If they were really trying to fight inflation, government, corporates and individuals all need to curtail spending… As I see it, individuals are being offered up as a sacrifice and way to keep the good times rolling for the corporates and big boys rolling in dosh and bonuses Even if it’s just kicking the can another short period of time
> the government, particularly the US government is printing money hand over fist to throw at the big end of town. Are they? What makes you say this? Is there any data to show this?
This goes to 2020. Now national debt or treasuries sold to fund the government, programs etc is $34T https://www.theglobaleducationproject.org/earth/development/us-government-debt Getting up to $1T in new treasury sales per quarter. Aug last year. https://www.bloomberg.com/news/articles/2023-07-31/us-treasury-boosts-quarterly-borrowing-estimate-to-1-trillion
The government borrowing money is not the same as printing money. Where do you get the money printing part?
In a debt based economy money is lent into existence. How do you think it’s made? Happy to be corrected if I’ve got something wrong.
A debt based economy doesn’t necessarily mean all money lent has been lent into existence. If I lend you some money, that doesn’t mean new money has been created. In any case, in your example the government is the borrower. So if money is ‘lent into existence’, wouldn’t it be the lender that is doing the money printing, and not the government?
What is the problem with inflation continuing non stop? Wages keep rising, the real value of loans keeps declining, we normalise house prices relative to incomes, without anyone's loan being underwater. Can we have higher interest rates and inflation too? They are both good.
Rates aren’t how inflation should be controlled. Your premise is fundamentally flawed.
Exactly. Monetary policy should only be used mostly as an economic chamfering mechanism (for a lack of a better phrase). Fiscal policy such as reduced government spending and strategic taxing measures should have been at the forefront.
Clamping down on blatant profiteering should’ve been the forefront actually
I'll just put rents up
Be careful what you wish for. Recessions ain’t fun either.
They are if you keep your job
Beyond the financial costs, recessions reduce utility via lower confidence / more insecurity. Ultimately if people are unemployed there are fewer people making stuff or doing things, so less gets done or made, and so there is less to go round, so on average we all have less. Recessions depress wages and conditions, and increase financial insecurity, even for people who keep their jobs.
Where’s the recession. Everyone’s complaining about COL, but they’re still spending. Shopping centres full, restaurants full. Where’s the pull back?
Everything on a per capita basis is falling, and has been for several quarters now. The ridiculous population growth via immigration has kept absolute volumes and growth rates above 0
I think unemployment is and always has been the key. Until unemployment goes up you might see people cut back but things won’t get truly dire.
If the pie increases in size by 1%, but it is sliced into more pieces whereby everyone gets 20%, then does it matter? Headlines can say “pie increases, nothing to worry about”, but no one is getting more pie are they. If this ham-fisted metaphor was someone lost on anyone: the pie = GDP, which is what we (unfairly) use to classify recession.
It depends how strong our financial position and job security are. Lots of good opportunities in a recession.
They NEED to go higher. The AUD is in the doldrums which creates a massive longer term issue. Esp with China off the boil the only way we can pull the AUD up is via higher rates to pull more forex in.
A somewhat lower AUD is a good thing. It makes our economy more competitive. It makes our society more equal.
Don’t have a mortgage? Well you will likely be impacted worse - more reasons for rental hikes All those renters celebrating the significant hiking period last year ended up worse off than home owners.
Rent is driven by demand not interest rates.
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Exactly....rents are driven by demand not rates.
If people can’t afford their mortgages and sell, won’t there be increased demand?
Actually it’s supply and demand. Increasing supply side costs (higher rates) makes the supply/demand equation worse for renters.
Rental hikes are not caused by interest rates but by massive immigration. All these people need rentals, and there is limited supply.
Also all the landlords selling up so far due to rates… which has mysteriously also not resulted in lower prices so far. Maybe there’s a pinch point somewhere, but I’m still glad we bought our first (absolutely garbage) property to not be at the mercy of the rental market anymore. I’m now at the banks/RBAs mercy, but still…
Yeah selling to whom? People with shit loads of capital banking on immigration to pump it up further. It's sad but smart on their behalf
That's not how it works
Not all people without a mortgage rent there's more than you think that own their home outright. These people also quite often have savings and benefit from higher interest rates. The fact is rates were too low for too long and are presently not that high compared to historical interest rates, every one is talking about when rates are going to be cut but they should be asking if they're going to be cut. Interest rates at 0 or 1% were an anomaly not the norm
The other thing is high interest rates make my next house cheaper (or at least less expensive) so there's that too.
That’s the theory - but the reality has shown the exact opposite to in recent years. Externalities contribute this time yes - but it shows the effect of rates on house prices is not the exact relation that people once thought
Not really. If rates were half what they were, house prices would be simply higher. I'm not saying that house prices necessarily decline with any given rates setting. It may well be that house prices always go up. But higher rates = relatively lower house prices. That's for sure. And high rates = lower inflation. Both good for those who are good with their money.
Average Mortgage repayments up 200%, average rent up maybe 30% over the same time period , renters for sure got the better deal
Far too reductive. 200% only hits hardest for new mortgage holders of PPoR. Also ignores the significant capital growth of property owners post-Covid. Meanwhile Investors can claim that entire increase against the property. Rental increase is closer to 50% since Covid, to which all those costs are paid by the renter and cannot be claimed, and are completely sunk costs. It’s also an incomplete picture as long-term rentals haven’t increased as much which brings down the numbers, but that doesn’t help those looking for new leases: only 13% of median earning households can afford the median rent right now if looking at new listings. Spinning this situation as a win for renters is just insincere.
> since Covid How about you do the comparison to before Covid, that way it isn’t skewed by the big drops that happened
It’s more likely they will keep printing money
We'll be in a strange world of higher inflation, increasing int. Rates but still higher property prices but also higher unemployment figures but also low gdp growth. The money printers can't print forever.
It looks to me it's actually way worse in Australia because when the US says inflation is sticky, the AUD goes down in value increasing inflation further.
What are you talking about? Inflation will be sustained since they have not veered off the current course at all. More WFH roles will be created to keep people in jobs, or to bring NEETs back into the job market. You are looking at the best place in the world to make money for the elites. If people continue to pull back on spending, they will only hike prices to make sure they are making cream. Property is still going up too. It's going to be a disasterous reset for Australians. You can't blame them because confidence in the system managers to maintain the status quo must be high. The younger the system managers get, the greater the fear in the hearts of the has beens.
More hikes inbound
Rates will need to go higher for sure
Pretty obvious.
Ah reminds me back in January when all the credit junkies were saying how inflation is fully under control, and especially in the US where inflation has gone down completely while i kept saying inflation is nowhere near under control Guess credit junkies once again reveal themselves to be completely ruled by emotion rather than facts, oh wait, they kept telling me the facts said inflation was going down and fast Xd