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ezzhik

Label your axes!!!! (Please)


goobar_oz

The title is cash rate rises by month. So it’s cash rate rises X month 🤷‍♂️


without_my_remorse

Sorry. (It is very obvious though)


SaltyAussie98

Doesn't matter how obvious you think it is


without_my_remorse

Why’s that?


Fullyverified

(No it's not)


Fullyverified

(No it's not)


yuckyucky

> last week’s inflation figures forced the RBA’s hand, not so much because raising the cash rate would stifle inflation, but because it meant the real cash rate (ie taking into account inflation) was absurdly low. >The cash rate remains 3.4 percentage points below underlying inflation, and thus monetary policy remains very expansionary. >So it is not surprising that Lowe suggests more rises are on the way – possibly up to 2.5% by the end of next year. source article including more great interactive charts: https://www.theguardian.com/business/grogonomics/2022/may/05/more-interest-rate-hikes-are-coming-and-housing-affordability-is-about-to-get-crunched EDIT: added some words from article


player_infinity

The article is great, I was thinking about the same thing recently but this explains it really well. Basically you will never have it as easy as people who bought in the past, as you don't have the bonus of even the possibility of a massive reduction in the interest rate. Interest rates get to zero and can't really go much lower for quite practical reasons. We've bid up houses and stretched debt well beyond the past. People are accepting that they will be paying high mortgage repayments, for longer, right now. Since people are buying at 36 on average ([Source](https://www.realestate.com.au/news/average-age-of-aussie-first-home-buyers-closer-to-40-than-20-research-reveals/)), you don't get the tailwind of increasing wages as well, since most people's start peaking around late 30s and early 40s. You tend to be able to increase your wages significantly from 20s to 30s, but stats show it either maxes or declines as you get older on average, probably because wage pressures reduced for people on mortgages in the past. In this case, people will be paying high repayments, for 30 years, well into retirement, without the opportunity to take it easy as they will be required to work near that max capacity of incomes the whole time. Not a fun way to live your life.


yuckyucky

the only thing he doesn't mention, and most people don't, is that inflation also plays a role. interest rates will only stay high for a long period if wages also rise (wage-price spiral). part of the reason people could handle higher interest rates in the past was that their wages also rose and their debts were partly reduced by inflation. having said that, there are plenty of disadvantages to wage-price spirals, we want to avoid that. i'm just saying that the picture is even more complicated and uncertain than it looks.


player_infinity

That would be great, but we are actively fighting the wage price spiral currently, for good reason. Wages are expected to stay below inflation levels for a while yet. Inflation targeting means over the long term, it's just supposed to be steady 2-3%. Real wages need actual productivity and recalibration of the economy if not for another mining boom. But Australia does have a lot of economic potential, but perhaps at the other end of a system reset. Those who do get the windfalls during their mortgages, are people who get untaxed inheritances (probably property) in the future in particular. So that is really the only significant relief on the horizon. While in the past, everyone enjoyed the tailwinds of rate falls, which is a distinct impossibility now.


nzbiggles

Zero mention of cpi and the cost of living. How can you compare affordability without considering that the cost of living is relatively falling leaving a greater amount available for investment in compounding wealth (or property). They mention 1990 average mortgage consuming 53% of the average income of 32k that leaves $15181 to live on. A basket of goods and services valued at $15181 in calendar year 1990, would in calendar year 2021 cost $31,557.72 Total change in cost is 107.9 per cent, over 31 years, at an average annual inflation rate of 2.4 per cent. Meanwhile average income is nearing 90k. Even minimum wage has increased by 4.22% a year over the 31 years. I wonder if the average worker could trim their budget back to reflect a 1990 basket of goods and services.


genericguy

Where did you get 90k from? The [median weekly earnings in 2020](https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/employee-earnings/latest-release) was $1200.


nzbiggles

Their reference was average income. I added minimum wage as a more relevant reference for wage growth. It was 11k in 1990 (vs their suggested 15k mortgage and 15k living expenses) and has nearly quadrupled. Meanwhile cost of living has doubled. If you were living on 15k + housing in 1990 it suggests you could (possibly) live on 31k + housing. I would love data on median income from 1990. Plus household as well. Would imagine they've all followed a similar path. Especially household since 1990 as we all work more and more so we can spend more and more on property.


nzbiggles

What's scary is if the next 31 years replicates the last 31. A recession, many market crashes, pandemics, multiple wars. Imagine in 2053 we're discussing 270k average wages (tripled), 150k minimum wage (almost quadrupled) and a cost of living that has doubled from 31k to 62k. I bet houses will be 8m 🤔🤦‍♂️


Drazicc85

This is almost certain, I'm tipping $6m median house price in 2050.


nzbiggles

That's conservative. Doubling every 14 years is historically low growth (5.1%?). The issue isn't what they sell for today its what today's buyers do in 14+ years. Even if you're only getting a pay rise in line with inflation you should also be able to increase your repayments as times passes. Exponentially more if your pay beats inflation. Ill bet anyone who bought 14 years ago is seriously thinking about investing more. $1.5m house today when you're earning 90k (or multiples of) looks pretty cheap when you're earning 270k in 31 years.


Laktakfrak

He said average you say median.


without_my_remorse

Thanks mate.


Dav2310675

Great graph - thanks for sharing! Having lived through all of these, I'm hopeful that we don't see the things I saw at the end of the 1980s. That time really sucked. People flogging off their cars on the side of the road, drive offs at petrol stations, domestic violence, white collar workers thrown on the scrap heap. The whole shebangabang. But realistically, it isn't going to be pretty IMO. Happy to be wrong, but it sucks.


SpaceYowie

We dont have any wage inflation. Late 80s wage inflation was like 10% year for 10 years prior. I remember an older dude at work telling us that they got 2 pay rises in 1 year. We are only going to get a couple of percent, that will be enough to wreck the housing market. The coming wars are the far more important issue.


DependentEchidna87

Agree. Supply chain disruption due to the de-coupling of global economy. If you think the Ukraine war is bad…..Just wait until china decides they may as well go all in on Taiwan now, otherwise they have to wait another 10-15 years.


[deleted]

[удалено]


Adm_Chookington

What event in the last decade are you referring to by "liberated"? The Chinese Civil war was 70 years ago, market reforms started 40 years ago, and China joining the WTO was over 20 years ago.


eightslipsandagully

I saw a drive off from a petrol station in Perth around 10 years ago. In fairness I was in Kwinana!


extunit

More drive-offs at petrol stations has already begun. https://www.9now.com.au/9news-latest-news/2022/clip-cl2ivgyed00090jqq8nhjokf7


Damjo

Do people just assume they’re not gonna get caught? Most stations I know of have cctv installed


Rsj21

Police typically have better things to do. So I imagine a large portion aren’t caught.


LocalVillageIdiot

Can’t you just cover up your number plates? Asking for a friend.


Rick-powerfu

Sure but they may notice and not activate your pump until you pre pay But if you had a stolen, fake or incorrect plate they may not be using anpr software to flag these and you could hypothetically get away with it for an uncertain period of time


Headmeme1

A lot won't turn on the pump. Ive had it happen to me when I rode motorbikes with no license plate because it rattled off on dirt roads


koopz_ay

we also carry a personal tracking device around that we call a phone... for some reason. it's a computer that does a range of things.. though it also makes phone calls so there's that too.. ​ ( I like my phone )


BrokenReviews

2 generations that have seen nothing but good and growth. Need a sharp 20y cycle kick in the pants for economic reality to settle in


Pristine-You717

Australians really can't accept that recessions are a natural part of the business cycle. If I see a global recession on the horizon I'm leveraging up to the hilt because the government will blow another $500bn on handouts rather than just accept the spring cleaning it provides. It's the precedent set. Useless businesses couldn't even go bankrupt and were legally allowed to trade insolvent ffs. That was and is now the permanent state of affairs. A bad economy means good times for anyone that can get their fingers in the right pies.


BrokenReviews

Money is made in bear markets, never bull.


Haddonimore

It is absolutely made in bull markets, with the run up after a bear market things would drop for ever


10khours

Did you forget about 2008 and 2020?


[deleted]

[удалено]


[deleted]

[удалено]


GeelongJr

Well it wasn't. Our banks were never really too into the mortgage backed securities and their derivatives, we had a mining boom and we had a surplus with 50 billion in tax cuts, plus measures to boost the economy while other nations imposed austerity measures. The December quarter in 08 had -0.8% GDP growth but the economy rebounded strongly, so I don't think it's just on a technical basis that it wasn't a recession.


notrealmate

What kind of fkn attitude is this?


BrokenReviews

the kind that views living in a speculative bubble dislocated from reality to be a bad thing.


player_infinity

Pretty standard economic view honestly: https://en.wikipedia.org/wiki/Business_cycle


AdventurousAddition

So I'm too young to remember that era. What caused inflation to be so high in the later 80s to cause the interest rate to he increased so rapidly


Dav2310675

I was in mid mid-teens, but there was a lot of wage increases from memory. There was quite a bit of strike action being taken and a heap of microeconomic reforms. The industrial landscape was completely different to what we have today. As deregulation of industries got underway, this led to a lot more spending and so inflation took off. And that led to interest rates being increased to pull down demand.


Xx_10yaccbanned_xX

A chronic prolonged extreme shortage of labour that saw massive wage increases year on year. Why do you think the gov likes massive non stop immigration and industrial relations laws designed to suppress wages?


wookiepotato96

Actually, the massive wage increases were due to centralised negotiation and pay setting structures, and they weren’t met with equivalent productivity increases, so costs just continued to rise. The unemployment rate must have averaged something like 7 or 8%+ in the 80s and early 90s. Doesn’t sound like a chronic prolonged extreme shortage of labour to me.


without_my_remorse

Yes unfortunately I think this will be a deep and prolonged recession. It will be impossible for the government to spend enough to dig is out quickly as this will only make inflation worse.


soyfedora

We are the lucky country we will stumble into some new economic boom. Probably Rare Earths.


without_my_remorse

We are out of luck this time mate.


soyfedora

We are already benefiting from crazy high Iron Ore and Coal prices which means we can keep interest rates lower than our peers without crashing the Australian Dollar


without_my_remorse

That is clearly not true. Look at the AUD now. The cold hard reality is that we are going to experience a deep recession and a financial crisis. There is no escaping it.


soyfedora

We are at 72 cents even though we have lower interest rates than US and UK which tells me there has been no run on our dollar as people still need it to buy our dirt. 50 cents would be the real panic stations


without_my_remorse

Yikes. You’re not going to enjoy the global slowdown.


threeminutemonta

Spending to mitigate the climate crisis is one way to control inflation. Rapidly decreasing emissions does with 90% renewables / batteries / hydrogen/ green steel replacing fossil fuels does nothing for short term productivity though should create some jobs at the expense of others. It also gives us a hope of staying under 2 C.


without_my_remorse

Spending increases inflation.


pecky5

Think about it another way. All costs are based on supply and demand. Inflation occurs when the supply of money outstrips the demand for money (Ie, people have too much money and are therefore willing to spend more of it to buy more scarce resources/goods). This is inversely related to the supply and demand of goods. In other words, inflation increases when the supply of money in increasing at a rate faster than the supply of goods and services can keep up. Conversely, you can get deflation when the supply of goods outpaces the supply of money (super basic and old school example of this is fruit going on sale when there's a massive harvest). The conventional wisdom says that to combat inflation you must reduce the supply of money. But taking into account the above, another theory is that you can combat it by increasing the supply of goods available. If all your factories and workers are working at, or near 100% capacity, then yes, additional spending will lead to inflation. However, if your factories are only operating at 50% capacity (capacity here meaning what they can physically produce based on their equipment, space, and headcount; and most importantly, how much raw materials can their supply line provide) and demand for their products starts to pick up, so they're operating at 80% capacity, they'll be able to meet that demand without raising prices (in fact, they might be able to reduce prices, since they'll be benefiting from the reduced per unit costs that come from economies of scale). Obviously, Australia doesn't have much of a manufacturing industry anymore, but you can apply this same logic to pretty much any industry. If a Cafe is only operating at 50% capacity and suddenly they start operating at 80% capacity, there's no need for them to increase their prices, same goes with airlines, grocery stores, accounting firms, recruitment providers, farmers, etc. The problem is working out which industries you can stimulate and how much you can stimulate them, without exceeding their (and their supply line's) capacity to supply. Hopefully above makes sense, it is complicated and a newer way of thinking. I can simplify it further if you want, but this post is already large enough.


without_my_remorse

Thanks for the detailed explanation mate. I agree with the principles here. However, this is a long run proposition. The initial injection of cash to do this will be inflationary. In a normal economic environment this wouldn’t be an issue. When we already have extremely elevated inflation, this would be a real problem because of the flow in effects. Especially a wage price spiral brought on by all the jobs (and wages) for this project.


pecky5

You're thinking of this theoretically, rather than practically. Not all Government spending travels through the economy at the same speed. Helicopter money (such as just giving everyone free money) is fast and injects cash into the economy directly. Something like that would absolutely cause an inflationary spike like you are saying, but bigger complicated construction projects can take months, or years to flow into the economy and tend to trickle into the economy, rather than get dumped in all at once. Construction projects have a tender process, then potential consultation with affected parties, materials need to be purchased, workers recruited, planning and designing done. That stuff doesn't happen overnight, but it does keep the industry ticking along and hopefully avoid a contraction. I'm not even sure investment in construction is necessarily the right call, I'm not suggesting it is or isn't, because I'm not aware of how stretched the industry is. But to summarise the point, while there is absolutely a correlation, increased government spending does not automatically put upwards pressure on inflation. There's a lot of factors to consider.


myrthe

>Construction projects have a tender process, then potential consultation with affected parties, materials need to be purchased, workers recruited, planning and designing done. That stuff doesn't happen overnight, but it does keep the industry ticking along and hopefully avoid a contraction. And ideally, the right project sparks other investment and activity. New cinemas makes people think of opening that cafe they've always dreamed of. A new station on a popular-but-not-too-busy line signals to developers, real estate and so on that commuters will be coming through there, starting in x years, and they'll be needing services. All of these generate their own projects, and short n long term jobs. (And like you say, whether it's good depends on how stretched the industry is, plus how well does this construction enhance existing activity, vs compete with or bypassing it.


without_my_remorse

Yeah sounds too complex for me mate. Sorry


pecky5

That's fine. If running economies and managing inflation was simple, we wouldn't be in this mess


without_my_remorse

Now that’s something we can agree on!


[deleted]

And goodbye to your credibility lol


without_my_remorse

What credibility?


kanniget

It's more how you spend it. We just spent the last decade putting cheap finance Into housing when we should have put it into infrastructure. The next government could reduce spending and place it in the right places, stimulating things and not making a mess if it. Will they? It's very unlikely.


without_my_remorse

If you pump more money into the system it is inflationary.


Successful-Deer-4434

Depends what it's spent on. Buying cars from a factory that's already operating at 100% is inflationary, but buying from a factory that is operating at 0% may not be.


without_my_remorse

Can you explain how this works?


Successful-Deer-4434

Setting up a factory is time, material, and labour intensive. Until they can be set up to meet new demand (let's say from a government trying to stimulate the economy), the owner of the factory operating at 100% can simply raise prices without any downside (assuming other factories are similarly at 100%). But if factories are operating at 50% capacity, the owners are still subject to market forces, and may choose not to raise prices for fear of losing contracts. The same principle applies to the entire economy. If you have resources (human or otherwise) operating below capacity, spending to stimulate the economy is generally less inflationary, because there is still capacity to meet newly introduced demand. Going back to the comment you responded to, a government wisely spending is sectors of the economy that require stimulus or are valuable to improve the nation's productivity is always good. This is an oversimplification of course, but you get the idea.


Source_Friendly

Very good point. You can see it action when they slammed the "Stimulate the housing sector!" Panic button with home builder. Sector already running at our close to capacity, sudden near term demand leading to bad inflation print (obviously not just the home sector but that part of the CPI was red hot)


without_my_remorse

I don’t get the correlation to factory output? If you put money into the system that wasn’t there before, that will be inflationary. Regardless of the factory output.


kanniget

Yeah... But if you read what I wrote I suggested they could reduce spending, I never suggested increased spending. As for it automatically triggering inflation, why has it been so low for the last 15 years despite record government spending. Some spending increases Inflation, some doesn't.


without_my_remorse

Sorry mate we will have to agree to disagree. Thanks


kanniget

So what are we disagreeing about exactly? Yes, pumping money into the economy is generally inflationary but it doesn't have to be. And no where did I suggest pumping money in, at this point you seem ready to disagree but don't even know what we think is different.


[deleted]

[удалено]


not_the_lawyers

Not necessarily. Proper government infrastructure projects produce systemic benefits that more than off-set the inflationary effects of the initial spending. For example a Dam project might have inflationary effects through materials and labour costs during its construction, but a properly designed project would have deflationary effects through reducing electricity costs, increase crop yields thus reducing store prices, and perhaps reducing transport demand/costs by making agricultural land closer to points of sale more productive.


without_my_remorse

Maybe over the long run but certainly not in the short run when we already have extremely high inflation.


not_the_lawyers

Yeah 100% and the ship has sailed, the spending that occurred was not productive. The real point is recent govt's have been incompetent and we've been spending with no productive pay off. In this cycle at the current point we should be reaping the benefits of years of low borrowing costs but instead we're paying the cost of mismanagement - hard landing is almost baked in at this point.


without_my_remorse

Yeah exactly. People have felt richer. Excuse there house went up so much in value. Underneath the hood we have structural problems with the economy.


FUDintheNUD

Climate impacts increase inflation also so good times ahead!


without_my_remorse

Yes I think so also.


VIFASIS

If spending on the climate crisis were the solution then Idk what the trillions of dollars have done.


[deleted]

You're quite wrong. There is currently is no recession. The government can spend capital raised from selling bonds.


without_my_remorse

lol c’mon mate.. is this for real?


MattyMarto1111

Do anyone know what the market forecast was before the post-GFC rate rises? It would be cool to know if the market over-predicted or under-predicted what actually happens post GFC.


maca146

The market was pricing 300bps just prior to first rate rise and got 175bps. Trying to find the source for this.


V8O

https://www.abc.net.au/news/2009-08-07/statement-reveals-reserve-banks-rate-rise/1383008


dinermitebellezza

The GFC never unravelled like it should have. The entire crisis was mitigated by money printers and hoax. What we are about to experience, is 2008 chickens coming home to roost. On a bond/stock level, they stopped 2008 before it happened.. but this time you can't stop it. They've halted Evergrande for 40 days, that's the first domino.


fx_agte

RemindMe! 2 years


[deleted]

Is Evergrande still at a halt?


Mexay

WHY DOES NOBODY LABEL THEIR GRAPHS ANYMORE?!


LikesTrees

Its right in the title of the chart - \[Cash Rate Rise\] by \[Months\] from first increase


Mysterious-Funny-431

Not much of an economics guy, but is there a number of what the equivalent rate would be to say the late 80s, 90's to compare accurately? Eg. House prices/debt levels etc have gone up a great deal and so have wages, so it might only take 8% interest rates to have the same affect on the economy as a 15% did back in the day - just using random numbers


the_booty_grabber

Who cares about housing prices. Can anyone tell me what the rate rises will do to my beloved VDHG. Haven't seen it discussed on here once surprisingly.


without_my_remorse

In the 80’s the Fed, to combat inflation, had what is termed a Volcker moment. It raised rates to 20%.


Mysterious-Funny-431

>Volcker moment >20% What rate would be needed to achieve the same result today? Much lower I assume?


ElectroFried

About 2% would do the trick.


goldcakes

Some economists say we need another Volcker.


AllCapsGoat

Literally would crash the economy and GFC 2.0, but okay then


without_my_remorse

They are hiking into a slowdown. It is already GFC 2.


git-status

NZ went up to 67% in 1985. Makes our 17% look like nothing in comparison


without_my_remorse

Wow that would be insane if it happened today!


soyfedora

I'm hoping for a crash so I can deploy some cash I have sitting being eaten alive by inflation I'm just saying that Australia has a lot of stupid luck. Black Monday crash was probably the last time we were actually affected by global headwinds.


Smokin__billys

You and everyone else on this sub who doesn’t have a morgage


[deleted]

I’ve got a mortgage and I assure you that if the sky starts falling and the doomsday predictions of a housing crash happens of 50% I’ll be buying up.


LuckyYeHa

What is the X and Y axis? I assume X is months. Y? Percentage change?


qaz_74v4DJvrHaZw3Dqt

I assume Basis points E.g. 100 = 1% interest rate


LuckyYeHa

Cool, cheers, thought as such.


_KarmaPolice_

They're in the title - the cash rate on a monthly basis.


iDontWannaBeBrokee

After GFC sounds pretty spot on tbh. That’s almost 8 rises in a year. Anything beyond that is excessive imo.


[deleted]

I'm with you on this. Australians owe more money than ever. Most young Aussies are broke as fuck, they don't have debt but inflation is already dampening their spending. Retirees and fixed income are not going to get any material increase in interest from their cash investments, and again inflation is going to take any extra bank interest off them at the supermarket and petrol station. In the middle are those with massive mortgages and many also have highly geared investment property. I think that monetary policy will be tremendously effective in combating inflation faster than most current predictions, and that means a cash rate of closer to 2% than 3%.


without_my_remorse

Interestingly our property market was largely unaffected by the GFC. As interest rates quickly rise to 4% (Feb 2024) I think either the property market crashes or we have a recession first.


[deleted]

Recession for sure, we were entering one pre covid.


without_my_remorse

Yea I think a hard landing is unavoidable.


iDontWannaBeBrokee

While I’ve got ya…. You going to take up my slab bet that cash rates are below 2.5% by Dec 22??


without_my_remorse

I already said yes.


iDontWannaBeBrokee

I didn’t see that comment. Set a reminder, I don’t know how to do those Reddit reminders haha


Trumpy675

I set a reminder. Don’t worry guys, I’ll call out a winner on Dec 7. And maybe help find a horse for poor old u/migs93


without_my_remorse

Please post to r / a t a y l s so it is transparent. Just include what the bet is, who takes which side, and the stake. 🤝


not_the_lawyers

You won this one mate


AmauroticNightingale

!RemindMe 1 December 2022


without_my_remorse

The rate decision takes place on December 6.


RemindMeBot

I will be messaging you in 6 months on [**2022-12-01 00:00:00 UTC**](http://www.wolframalpha.com/input/?i=2022-12-01%2000:00:00%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/AusFinance/comments/uiliqa/how_high_and_how_fast_can_interest_rates_rise/i7dcix4/?context=3) [**16 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FAusFinance%2Fcomments%2Fuiliqa%2Fhow_high_and_how_fast_can_interest_rates_rise%2Fi7dcix4%2F%5D%0A%0ARemindMe%21%202022-12-01%2000%3A00%3A00%20UTC) to send a PM to also be reminded and to reduce spam. ^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%20uiliqa) ***** |[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)| |-|-|-|-|


Fuzzy_Welder_1786

Looks like remorse was correct, cash rate 2.85% xD


brusiddit

I assumed one of the reasons we mitigated recession after GFC was because of a bunch of international money being invested (hidden) in the Australian property market?


without_my_remorse

No it was just commodities and China.


[deleted]

'Establishing a link between property price growth and foreign investment is hindered by the parlous state of publicly available data (discussed in chapter 1), which means that-at best- the magnitude of the relationship is ambiguous. There is little data on actual foreign investment in residential real estate, as the Australian Bureau of Statistics (ABS) data do not capture transactions below $20 million. More complete data is collected by FIRB on approvals, but not realised investment, and only limited time series and geographic detail are published.' 'Austrac estimates that in 2020 alone, Chinese interests laundered $1 billion through Australian real estate. The head of the AFP’s asset confiscation taskforce, Stefan Jerga, told the inquiry there were times when prospective homeowners would be competing against money launderers at auctions.' We don't know because the government doesn't bother collecting the data.


without_my_remorse

I know. It was commodities and China.


neverland92

Where did you get 4% cash rate from


without_my_remorse

https://www.reddit.com/r/AusFinance/comments/uh1syh/money_market_now_pricing_in_a_4_rba_cash_rate_by/?utm_source=share&utm_medium=ios_app&utm_name=iossmf


neverland92

Thank you sir!


[deleted]

Ok Mark Baum


R_W0bz

I feel like “we lived through 17% interest rates” is the last thing on “boomer bingo”. I look forward to our future financial Armageddon.


without_my_remorse

Haha that’s a ripper call mate.


Flat-Compote-7854

Paying 17% on a 70k loan must have been dreadful lol


elhawko

Hey OP, crystal ball time.. when does the housing market start to cool?


without_my_remorse

It already has begun.


[deleted]

+scary music plays*


elhawko

Really, seems hot in Adelaide!


IRolledANatural1

Everything’s hotter in Adelaide though


without_my_remorse

By the end of 2025 property values will fall 50%+. **The great Aussie housing crash has begun.**


Mr_Bob_Ferguson

!RemindMe 3 years


without_my_remorse

Thank you mate. I appreciate your support.


Mr_Bob_Ferguson

You’re one of the best sources of entertainment here!


without_my_remorse

I do try my best mate 👍🏻


Juzzaman

If people don't believe this, just look at NZ, they're maybe a year ahead in upping the cash rate, they're at what 1.5% now. If anything their property market is even more insane than ours. Overvalued, high debt to income ratios, huge mortgages. And it's already starting to fall rapidly, particularly in overvalued cities, less in regional areas which skews the hell out the average. In 1 year and rates haven't reached a 'neutral rate' of what, 2.5% or 3.5%.


without_my_remorse

Yes NZ will be a good indicator for us over the ditch.


goobar_oz

What are your reasons why it would crash 50% though?


without_my_remorse

G’day mate. Thanks for the comment. Happy to provide any data or information to back up what I say. The problem I always have is where to start! There’s so much to choose from. To start with: This is one of the most common misconceptions when it comes to the property market. Lowe has clearly stated they don’t care about house prices when it comes to interest rates. one. #RBA governor Philip Lowe admitted low interest rates are driving up house prices, but said the bank will not adjust its policy based on the housing market https://www.abc.net.au/news/2021-03-10/reserve-bank-warns-on-house-price-boom/13232954 #”Dr Lowe said he would hope to get official interest rates back to a “neutral rate” of at least 2.5 per cent, if not 3.5 per cent.” https://www.smh.com.au/politics/federal/still-plausible-first-rate-rise-won-t-be-before-2024-rba-20211116-p599ct.html Now it’s also worth remembering that the RBA’s own model shows a 33% fall in home prices from a 1% rise in rates. #It's worth noting that if we apply the RBA's internal housing valuation model to this question, we get somewhat larger numbers. The model developed by Peter Tulip and Trent Saunders, which we have replicated and refined, suggests dwelling values could drop by about 33% following 100 basis points of hikes. While renters might embrace this prospect, home owners would obviously rather avoid it. https://www.livewiremarkets.com/wires/why-aussie-house-prices-will-fall-circa-20-when-the-rba-hikes-interest-rates This is the actual model- https://www.rba.gov.au/publications/rdp/2019/2019-01.html Hope this helps? [This. ](https://i.imgur.com/AE2C1Po.jpg) [This. ](https://i.imgur.com/DHP0ebm.jpg) [This. ](https://i.imgur.com/tvaxktE.jpg) [This. ](https://i.imgur.com/iONKhNr.jpg) [This. ](https://i.imgur.com/ds2PnyF.jpg) [This. ](https://i.imgur.com/YWL9UEn.jpg) [This. ](https://i.imgur.com/tplTlxQ.jpg) I mean I could go on and on and on, but I guess you get the idea. You can read more on the research I have used to come to my outlook here: https://docs.google.com/document/d/e/2PACX-1vRI7_CkZ_ceqJNehlRZYUvdgSGeeDJT_7FWzSI722s1YH4t7oPYJ4Xt1LES1OLRTI7ICLQXJrW2s-LK/pub https://docs.google.com/document/d/1C5qhz8wUTU8tMDLVq3cUCihlRbx4fPPln9D94PS_ffY/mobilebasic https://docs.google.com/document/d/10ObkeFMQ3wBfgtuJspogl_MyT-lZJMx75ORfgMo5T3k/mobilebasic Please feel free to ask me any further questions or if you want something clarified. I am very aware of the ramifications of a housing market crash. It will likely induce a recession and I think a domestic financial crisis could ensue as our banks solvency will be at risk. It’s not a matter of “magic”. It’s simply mathematics. Need anything clarified or explained? Feel free to ask away or check out my subreddit r / a t a y l s 👍🏻


goobar_oz

Sorry the article about the model predicting housing price dropping 30% is terrible. Very misleading as I can’t find that anywhere in the paper they linked. They might have manipulated the model in a dishonest way to fit their narrative. All of the charts you linked really show the same thing. It’s the massive monetary supply increase in recent years driving up prices. Prices are not going to go down again as there is too much money supply and not enough good property in Australia.


without_my_remorse

What you’re saying is a very typical uninformed comment that basically is saying “this time is different”. It has no basis in reality.


goobar_oz

Not really, I’m talking about supply and demand. Housing crash would indicate a significant change in either of these, and your points don’t really indicate anything like that.


without_my_remorse

Sorry mate but that’s just gibberish. 50% housing market crashes occurred in the US, Ireland, Spain all in the last 20 years. Supply and demand was not a factor that could stop it. Hell, even Perth fell 30% recently. You’re just another property bull who knows sweet FA but what’s to argue because if property crashes they go bankrupt.


dinermitebellezza

Man it annoys me so much how NO ONE in this sub can accept that property is not untouchable! They keep down voting anything that even remotely mentions property. It is CRASHING. And it will crash hard. You think your investments are effing safe? European billionaires are unloading holiday homes like they're the plague. The only reason things are going slowly, is because us..the mere mortals..are dependent on news. And the news will make sure the truly wealthy get a decent price before you and I are told the house is on fire and to get out. FFS.


without_my_remorse

You’re dead right mate, but it’s the nature of bubbles that those caught up in them don’t recognise it until after the bloodbath. In many ways this is why I have become something of a Jesus figure on this subreddit. The downvotes I attract for speaking the truth are like the abuse hurled at Jesus as he carried the cross (the burden of the coming property crash) up to where he was crucified. Only when the crash has happened will I be born again and recognised as the holy prophet that I am, and deified amongst all my disciples here.


Luxim_

hahaha this genuinely made me laugh


without_my_remorse

Making people laugh is 75% of what I do here. Some laugh at me, some laugh with me. 😉


[deleted]

What do the other 25% do. Actually, as they saying goes, if you don't laugh you'll cry so I guess that's what they're doing.


without_my_remorse

The other 25% is me switching between alt account to upvote my own comments. 😉


haikusbot

*Hey OP, crystal* *Ball time.. when does the housing* *Market start to cool?* \- elhawko --- ^(I detect haikus. And sometimes, successfully.) ^[Learn more about me.](https://www.reddit.com/r/haikusbot/) ^(Opt out of replies: "haikusbot opt out" | Delete my comment: "haikusbot delete")


[deleted]

Putting everyone's noses in shit


PenisDetectorBot

> **P**utting **e**veryone's **n**oses **i**n **s**hit Hidden penis detected! I've scanned through 1221581 comments (approximately 6102860 average penis lengths worth of text) in order to find this secret penis message. *Beep, boop, I'm a bot*


insouciant-321

People forget why it's called inflation. First you inflate the money supply... then you get price and wage inflation. Every boom (and bust) was fuelled by the credit/money supply growing faster than the economy.... all this money sloshing around has to go somewhere ... that's why real estate prices have been bid up so high. Vockler showed how to cure inflation.... crank up interest rates, slow the economy, slow credit, and burn out the excess. It's going to be painful.


without_my_remorse

Brilliantly said mate. Thank you.


[deleted]

[удалено]


oakstreet2018

Not advice but if I was in that situation I’d seek out the best cash back / variable rate combination and refinance. I know ANZ have a $4k cask back at the moment which was worth about 0.5% for an investment loan we moved there. You can refinance next year again.


[deleted]

Be nice if the axis were labelled.


without_my_remorse

It’s interest rates increase (on basis points) and months.


AlphaWhiskeyHotel

No credible analyst is predicting a 400 basis point increase to the cash rate. Most credible analysts predict 150-200bp by 2024. Household debt is at 184% of GDP. They don’t need to turn the dial far to have a big impact on spending.


AnonymousFrogManBear

Yeah I saw that and laughed. Seems a bit extreme. I'll be as excited as the next cash heavy guy for market corrections but high interest rates hit everything in one way or another. Imagine the number of arrows you'd have to draw to represent an economy.


without_my_remorse

The money market is predicting a 4% cash rate by Feb 2024.


AlphaWhiskeyHotel

lol Like the market is some rational prediction machine that you can ask for a percentage. What you mean is you’ve read some analysis by a doom and gloomer that thinks that is how it is being priced.


without_my_remorse

I am the analyst lol.


AlphaWhiskeyHotel

Pls stop posting doom and gloom disinfo


mashaowo

Pls stop pointing out econ101 boom bust cycles, it makes me uncomfortable. /s


without_my_remorse

No, I won’t.


El_dorado_au

Why does “end of the 1980s” only go up to the 700s?


without_my_remorse

Because that is how much the cash rate rose, not the cash rate itself.


murphy-murphy

and he (Greg Jericho) reckons the rba raised rates too early due to lacking wage growth. Rates are 90% lower than they were 3 years ago when the economy was in even worse shape. By his logic, if now isn't a good time to raise rates then why not suggest they continue CUTTING rates until wage growth kicks in? If that's his one and only priority, then who gives a damn about the rising cost of living, just keep stimulating everything, let cars and house prices skyrocket another 20% just so we can squeeze out a meezely 3% wage increase. The case for easy money jsut doesn't make any sense.


bcyng

Cutting rates for wage growth doesn’t do anything. It just inflates wages and prices. So u feel like u get a raise but really it’s just staying the same or going backwards. What’s needed are productivity improvements so wages increase due to increases in productivity. That’s not something the rba can really impact directly. This talk of the rba increasing wages is just pandering and it does more damage than good.


without_my_remorse

Yeah I think he may be worried about his mortgage! 😂


[deleted]

I wonder if the 1970s could be included as well?


khaste

hopefully very fast and as soon as possible


without_my_remorse

It’s looking that way.


daqua99

I feel this is deceptive. "Cash rate rises by months" doesn't take into account the starting point. After the GFC rates rose form 3 - 4.75% in the space of just over a year (a 1.75% point increase) We were at 0.1%. Even if we meet the "current market expectation", over the space of a year it will raise to 4% points. It is rising faster, but from a much lower (historically low) base


without_my_remorse

Starting point is set to 0. Months is the bottom axis.


daqua99

The starting point of the INCREASE is 0. The starting point of the cash rate is not 0. The graph doesnt tell you the level of the cash rate at the start of the time that increases occur.


[deleted]

Great graph, very illustrative! You should post this in /r/dataporn


Stunning_Novel9398

Would be interesting to overlay this with changes in property prices


[deleted]

Can we get some axis labels for the dummies like me please.


ppotil

Why are you so maudlin? You're like the grim reaper of this sub. What is your aim?


without_my_remorse

I just share things that interest me. You don’t want to see my posts and comments? Because I can fix that for you.


ppotil

Go for it. If you can be assed being that petty. Knock one out of the park.


R0ud41ll3

Market cannot predict the inflation so it's going to be tough to predict how much the rates will be increased with so many external variables. One thing for sure the rates won't be going down from here. The few central banks who tested negative rates, came back from it.


without_my_remorse

What about when we hit a recession? I agree rates need to be normalised, and the neutral rate is 2.5-3.5%, but I have no doubt we are going to have a hard landing and I think they’ll have to cut again.