House prices debate continues unabated as the Federal Government tries to weigh in to the debate and signalling moves to avoid bursting of the bubble which now everyone says "exists" in Sydney and Melbourne. The spiraling investment market fueled by considerable equity from the investors own home and availability of interest only loans have exacerbated this asset class for lenders who have now been forced by the RBA as well as their own credit risk to dramatically wind down interest only loans. Investors account for 40% of the household borrowings which suggests that the people who are looking for their first home or even upgrade are being forced to look far away from the CBD. The State and the Federal Governments are poised to make announcements to tackle this crisis and the budget measures are the ones to look out for. The Government has categorically ruled out any changes to the incentives for negative gearing for the investors - however it is true that the RBA is factoring in the housing affordability parameter as a key one to affect their decision on future movement of cash rate. In any event, we are seeing the investor loan costs have gone up significantly although the cash rate has remained steady - which shows that the banks themselves has acknowledged the risk in the housing asset class.
MARKET DATA
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) Iron Ore | As at 7-Apr 1.50 1.78 2.54 2.31 0.7253 0.7062 83.08 5.1899 5,839 2,356 20,656 3,287 55.41 1,254 78.92 | As at 31-Mar 1.50 1.79 2.67 2.39 0.7644 0.7161 85.67 5.2734 5,869 2,363 20,663 3,223 53.47 1,249 78.92 | 1 year ago 2.00 2.25 2.40 1.72 0.7535 0.6627 81.91 4.8823 4937 2047.6 17576 2984 41.94 1240.69 52.19 |
RSS Feed