Yesterday Japan lowered while the RBA did not raise. Your dollar crashed against the USD and the SGD.
If the RBA wants to wait for QE2 that's fine but now we see 2 more rate rises coming. I'll leave it to you to understand what this pause and two more rate rises mean for your inflation and housing prices.
Yikes I feel sorry for anyone in Perth.
http://www.watoday.com.au/wa-news/p...he-nation-20101231-19boj.html?from=watoday_sb
Perth property market the worst in the nation
Aja Styles
December 31, 2010
Perth's housing prices have slumped by 3 per cent, making it the worst performing capital city in the country, according to the final data released for 2010.
The median house price has dropped to $460,000 over the three months leading to November, but remains above Brisbane and Adelaide, which also slumped but by a smaller margin, according to the RP Data-Rismark survey.
The top performer was Darwin, which saw house prices increase 1.9 per cent to a median of 465,000.
Advertisement: Story continues below
Christopher Joye, Rismark’s managing director, said the under-performance in Perth and Brisbane had persisted in line with their higher repossession rates that came about from the Global Financial Crisis.
Perth sustained a 3.4 per cent loss, seasonally adjusted, for the year to date. But it gained a 4 per cent increase in the rental house market and 4.3 per cent increase in units.
For 2011, financial markets are currently pricing in a further two 25 basis point Reserve Bank cash rate increases, while the economic community expects a more aggressive three to four rate hikes.
"We believe that there is a risk of at least three cash rate increases in 2011," Mr Joye said.
"In this event, our central case is that there will be little-to-no nominal dwelling price growth over 2011, with a chance of small nominal declines.
"This is no bad thing, and will only further improve asset-class valuations.
"Indeed, Rismark has recorded an improvement in Australia's dwelling price-to-disposable household income ratio, which has fallen from a peak of 4.7 times to 4.4 times in the third quarter of 2010.
"We believe that the likelihood of substantial national house price falls is remote."
RP Data’s director of research, Tim Lawless, agreed that market conditions were likely to hit the doldrums over the coming year.
"The expectation of higher mortgage rates will be enough to keep a lid on capital gains across most parts of the country," he said.
Mr Joyce applauded the Reserve Bank's approach for setting interest rates to take into more explicit account the changes in asset prices, including shares, commercial property and residential housing.
He said the accelerated hikes in 2009 and 2010 would have been to "engineer a cooling in a housing market that it perceived to be growing at unsustainable rates".
"Other central banks, such as the Swedish Riksbank, are now following the RBA's innovative lead," Mr Joyce said.
However he cautioned the RBA to take care since the strategy also posed considerable risks.
"It is always possible that this benign autocrat overplays its hand and lifts rates too far in response to non-inflationary events," he said.
"Mistakes in this vein arguably occurred in the late 1980s, which led to a peak mortgage rate of 17 per cent in January 1990 and the recession 'we had to have'.
"As a consequence, unemployment soared to around 11 per cent.
)
