This comment was originally made at http://www.macrobusiness.com.au (some of the links may be locked).
We can watch with interest just what APRA does, publicly and quietly over Monte Carlos, in the Sydney market to stop the most recent 10% reduction in the target rate from further goosing the market.
Although rents are stagnating, they have not really fallen significantly, which is consistent with the still low vacancy rates in most markets (Hobbes knows a few where vacancy rates and consequently rents are starting to look a bit healthier – which is good news).
All in all – until the population ponzi slows or the investor demand weakens (both local and foreign) at last there is at least better levels of new construction.
If they over do it at least we will have low cost housing for a decade or so.
A bit of malinvestment in housing beats malinvestment in quarries any day. Ever tried to sleep in a quarry?
Sure the banks might experience some discomfort but we can always nationalise them after they have defaulted on their foreign debt obligations – lol.
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