RBA switched rate priority on house prices versus jobs

Has anyone seen that Dominic and Josh bringing up the “Big Australia/NSW” idea again? So predictable. Anyway, also note the quality immigrants they are hoping to attract. All those people will work from home and want their children go to good schools. Think what that would do to house price, especially in desirable area.

Thank you to those readers who read and commented about gold as money. I agree that property is wealth, but not money. Money is used to buy property. (See the Parable of the Talents in the Bible). Money is the holder of savings wealth to bridge the time between providing valuble goods and services and investing it in property and business ownership. The ability to own valuable money rather than being given an IOU in paper or plastic as "legal tender" is like a ponzi scheme, where the last one to hold it loses everything. I can never understand how, especially in the "land of the free and home of the brave" that Americans aquiesced to this freedom being taken away from them by Roosevelt in the New Deal. Possessing gold was punishable by big fines and jail time. Property and land however bring their own problems. Property comes in huge lumps and it requires active management, especially agricultural land. Owning rental property requires the landlord to do something about a blocked toilet, but you never have to fix those in the Commonwealth bank as a shareholder. I do not expect gold money anytime soon, as no one in politics would want it, because it takes away their power to control people. Crypto (my typo previously) reminds me of the Hans Christian Anderson fairy tale "The emperor's new clothes."

Houses are the new gold, even better with rent.

Excess liquidity has to go somewhere. With 1% interest rate for cash savings, people are forced to take risks. For most people, real estate is much easier than equities to understand and perceived to be safer. Adding the favourable tax policies, low interest rate and easy credit, it’s impossible for real estate to avoid boom. Are RBA, APRA and all other acronyms too dumb to have a strategy or simply don’t care? Both.

My scorn and derision for the powers of central banks worldwide knows no bounds. Return to full value money in gold is the only answer to trust in government issued money, as existed for two and a half millenia before the first world war. While cryto is not the answer in my opinion, its popularity indicates the desire to get away from government issued money of no intrinsic value. Designated inbuilt inflation rates for the Reserve bank to achieve, and penalties for savers, and the ability to decree non-market interest rates is doomed to cause more problems than it fixes. Money in gold sovereigns, with interest also payable in gold, would soon limit that power to mess things up. Before anyone objects to this comment, let me remind you that modern mining technology has produced sufficient new gold since 1900 to keep up with the world's population. 85% of all mined gold has been produced since this date, notwithstanding the gold rushes of the 19th century.

David I agree but don't think they will ever want their power limited by the imposition of the discipline of gold itself or a gold standard. My biggest concern is that SDRs created out of thin air and backed by nothing will become the new international currency. The USD can't continue as reserve currency forever without further destroying its own economy by running increasing trade deficits. SDRs would be one step closer to the horror of a totally planned and centralised world economy. I also don't want the removal of cash from the system. CBDCs are a method of forcing you to spend by potentially imposing negative rates or outright confiscation of savings. US authorities have just released a paper about regulating crypto. Crypto users continually talk up its benefits. I get why they want it but they are not limited in supply. They are Ponzi schemes. I don't see bullion buyers continually pestering others to buy bullion like crypto 'investors' do.

The 3%buffer on housing loans demanded by APRA is difficult to understand. The borrower has to demonstrate this to obtain a loan. If the whole idea of this is to stop people buying houses by making it more difficult to obtain a loan, why not put a ceiling on the amount of money that can be loaned for houses by each ADI. Seeing that the borrower and seller have no idea which bank has money available to lend at any one time, prices will drift down if the seller really does want to sell. Speculators will not like it.

No one ever takes into account cash overseas buyers. I want property ownership by citizens as high as possible. I don't see prices drifting down. The world has been flooded with liquidity and many people will want to convert it to something tangible like real estate. Pointless leaving it in the bank.

We need to talk. If increasing well-being and reducing mental health is a goal, then the process of selling and buying properties needs to be reviewed immediately.

Imagine a world where you will need to put a bid on the school uniform for your child, or supermarket ingredients. You would win the shirt and the jumper but not the pants and the socks. You will spend hours in the supermarket and come back with only half of the ingredients you need. In March 2020, some people tried to make an online auction on toilet paper and Alcogel. These people were condemned and for a good reason.

At the moment, auctions are a legitimate way to handle buying and selling of properties in Australia. To me, auctions look like a way of irrational gambling that adds a layer of anxiety into society. When talking about anxiety, I refer to all sides - sellers and buyers. Both spend sleepless nights trying to calculate if they can buy or sell in time, developing hopes, and much too often get disappointed and almost always worry.

Often, buyers who end up buying are happy but realize that they ended up paying hundreds of thousands more than the guide price at the spur of the moment.

If you read this, then most chances you went through this process. Do you think that the next generation should go through the same thing?

A property should have a selling price. It can be high, but it needs to be stated clearly. And if we try to change things for the better, then nobody should hide from the selling advertisement information such as internal size (no, it’s not total size) or the price.

Changing the selling law to support a known and non-fake selling price (Agents, we all know you mean much more than the price guide) will lead to more sanity and a happier society.

Banks have an evaluation figure for all properties. The banks base their evaluation on the last selling prices of similar properties in a suburb, size, etc. The evaluation figure should be a base for deciding on a price. If the seller wants to make it higher than bank evaluation, they can. If the buyer wants to negotiate it down, they can always try. However, a price figure should be stated clearly.

If we want to make the process easier and accessible, then properties evaluation price should have a similar site as cars for sale - for example, redbook.com.au

In conversations I am having on the matter, Australians seem to hate the Auction system, but accept it as a fact. For people who came from overseas, the auction process is hard to get used to. The stress that comes with auctions is not proportional to the event. Buying a property should be a happy moment and not a nerve-wracking one. Long past the days when Australians auctioned for commodities as wool, and it's about time they will stop auctioning for a property.

This is so true. Australians should develop a system where thinking about citizens.
Why auction is needed? This simply delivers wealth to someone already is wealthy.
Why allowing investors to buy like 10 properties? Do they actually need to live in those 10 hourses?
These systems need addressed. Median housing price reach 1 million dollar. Is typical Australians that rich now that they are able to afford them?
System is currupted because right now because only rich gets richer.

We had 3 houses in our street in Duncraig Perth that were rentals...all put on the market and sold in this overvalued market....obviously the property investors will be cashed up ready when the interest rate goes up and the you know what "hits the fan" they will buy up in the lower market...America will put up the interest rates and we will follow like sheep. Or the Aussie $ will be worthless.

I am tired of hearing about how investors own 10 properties. ATO stats show most investors own one (70%); these people are providing rental accommodation. Less than one percent own 5 or more.

We are not following like sheep. If the USA and others lower rates, we have to as well or the AUD will be too strong for exports. Fiat currency is deteriorating in value so individuals are attempting to preserve value with real assets. This is rational behaviour.

RBA is asking the banks to do the dirty work for them with the buffer of 3%. There is no IMF(international monetary fund) pressure on RBA, we cross the bridge when we get there.

Surely it makes sense to increase loan rates just 1 or 2%, this would stop crazy house investment speculation & people with good savings will be able to get a sensible return on their money.

They still wouldn't get a good return even if rates increased 1 or 2%, it's unfortunate but term deposit funded retirees are really going to suffer. These days you need to make 7-8% or you're going backwards in real terms. Inflation has started and it's only going to keep coming - especially with rent increases now that alot of investors are selling out of property or prevented from buying more property due to changes.

I suspect that we might find out in twelve months that the RBA has been fighting the last war in its effort to raise wages and inflation and that its indication/promise that the cash rate will not rise until 2024 was unwise. It has set the scene for it to be boxed in on these issues, which will limit its ability to change policy.

Phillip Lowe answers questions like a politician. Blame someone else and say it is someone else's responsibility. Higher house prices are good for sitting governments as home owners feel wealthier rather than thinking "I have a roof over my head and I still have a roof over my head". Live in the city and move to the bush is the only way you become wealthier when house prices rise. Lowe didn't appear to be concerned about employment before Covid so why now? Cheap money for his boss and to support a very wasteful and inefficient government.

As demonstrated by the border closures due to Covid, full employment is best addresses by cutting migration. Cutting interest rates mostly creates speculative investing, businesses invest/expand based on demand for their goods and services not on interest rates. The RBA's own economists (Saunders and Tulip in 2019) clearly demonstrated the link between lower rates and higher house prices.

If you haven’t got a job in WA you must be very elusive report of farmers offer 175k for workers in Esperance