Posts Tagged ‘Australia’

Australia is scrambling to find ways to support their housing market

December 15, 2010 Comments off

The RBA is allowing banks to sell Mortgage backed securities by another name – covered bonds.

This rule change will lower rates in Australia by approximately 50bp – but at this point, the bubble is over.  Valuations are simply too high, and everyone that wants a home already has one.

The Australia housing market bubble is popping – you can see it in the auction closing results.  This guy is the Calculated Risk of Australia.  I started following Calculated Risk back in 2005, and he was a lone voice in the wilderness documenting the day to day numbers associated with the U.S. bubble.

How bad will the fallout be for Australia?  The currency will get hammered for a few weeks while the carry trade unwinds.  After that, it depends on the strength of the global recovery.   Australia might get lucky yet again – by being the only country that has a crash during the strong world recovery.

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