Working Papers

The Market Believes the RBA is Targeting House Prices

The weighted average of capital city established house prices rose a Steve Keen-busting 4.8% q/q and 20% y/y for the March quarter, with gains in Sydney and Melbourne in excess of 20% y/y. This saw three-year bond futures savaged by around 7 basis points and the implied probability of a 25 basis points tightening from the RBA tomorrow surge from around 50% to around 65% on iPredict. The ugly 3.4% annualised result for the trimmed mean of the TD-MI inflation gauge released an hour earlier should be more important for the RBA’s deliberations, but it is house prices that are grabbing the market’s attention.

posted on 03 May 2010 by skirchner in Economics, Financial Markets, House Prices, Monetary Policy

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Yep, 28% YoY in that well known epicentre of the resources boom: Melbourne.  That just screams bubble.

Now we have rising rates colliding with a Euro debt crisis, China tightening, and the end of ZIRP and QE in the US.

Grab some popcorn, this could get interesting!

Posted by .(JavaScript must be enabled to view this email address)  on  05/05  at  09:36 PM

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