AFR: Silliest RBA claim ever–House prices 30% undervalued!
From AFR Contributing Editor Christopher Joye
|
|
In The Australian Financial Review I interrogate one of the craziest claims to ever emerge from the RBA’s Martin Place headquarters: the proposition that Aussie house prices are now "30% undervalued" having been "fair value" 12 months ago (click twice on that link to read the full column or AFR subscribers can access the direct link here). With careful analysis I show that according to the RBA’s own modelling the "fair value" estimate in April 2014 was more correctly interpreted as 20% to 30% overvalued. And given an 11% jump in house prices in the period since while wages have improved by only 2.3%, the magnitude of overvaluation has increased. I reveal that the basis for the RBA researcher’s silly "30% undervalued" statement is a once-in-a-century decline in interest rates that is an artefact of governments’ spending more than $10 trillion to bid up bond prices. It is therefore even less credible than the belief that Chinese equities are good value because the Community Party is spending billions trying to prevent them from falling. If you accept rates are going to one day normalise, Aussie housing remains very much overvalued. Click here twice to read the full column or AFR subscribers can access the direct link here. Also, if you want to watch me debate the question of a housing bubble with BetaShare’s chief economist, David Bassanese, click on the video link below…Comments and feedback always welcome…
|
|
|
|
|
|
|
|
|
|
|
Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163).
Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS).
Archr is registered in England and Wales No. OC371018. Registered office Chancery House, 30 St Johns Road, Woking, Surrey, GU21 7SA
This message may contain confidential or privileged information. If you are not the intended recipient, please advise us immediately and delete this message. The unauthorised use, disclosure, distribution and/or copying of this email or any information it contains is prohibited.
This information is not, and should not be construed as, a recommendation, solicitation or offer to buy and sell any securities or related financial products. This information does not constitute investment advice, does not constitute a personal recommendation and has been prepared without regard to the individual financial circumstances, needs or objectives of persons who receive it.
You are receiving this email because you are a valued client of Archr.