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RE: Home Prices are Rising Five Times Faster Than Wages - Australian Property Market Update for Week Ending 23 July 2017
Great post Jason, have you notice the surge in the Australian dollar lately, if this continues it's going to have a huge effect on the Aussie economy. This could force the RBA to drop interest rates to try to halt the rise in the A$, zero interest rates here we come!!!
Indeed, great point. I think the RBA has always seen lower rates as an inevitability. The strong dollar provides just the excuse they need to go ahead and do it. Otherwise they would cop it for throwing more fuel on the property market fire. I'd also expect APRA to tighten up further on investors.
You could compound that with a continuing slump in commodity prices as the world teeters on the brink of a recession. That will definitely put cap on wage growth as well.
Yep, the RBA faces a tough task in boosting wages. I do expect them to try, however, which makes things interesting as it could lead to excessive inflation. That said, I suspect the USA will destroy their currency first, and then the RBA will have to break ties with the dollar to avoid the same. As they let the Aussie appreciate (relative to the USD) deflation would follow.
Time will tell.