Property bust not here yet … worse to come

Another 25 points by RBA today and a promise of 2-3 more rises before next financial year. despite rises in interest rate, property prises still keep creeping up.  Very interesting indeed

Hey D, i see the logic behind it.

Interesting reading by Westpac : http://www.news.com.au/business/story/0,23636,22756808-462,00.html
In short, Interest is 25 point up with warning of another 25 point coming, BUT consumer spendings did not suffer much, and those who in rent are actually started spending more.
So  people still have enough fat to take the beating. I wonder at what cash rate the middle class will start to suffer, 10-12%?

OK, bright part of Aussies  have elected the Labor party to rule the country. I hear that they are known for weak economy control.
Next 12 months should indicate where are we heading. Any thoughts anyone?

My prediction is interest rates will hit 10% in next 2 years.  I don't think it's a political decision, just how much interest rates need to rise to stop people spending.

Can you substantiate 2 and 4.

2.  I don't see any levelling out; my observations show that it is accelerating.  In Brisbane, I could give you example after example of rising land prices, shortage of properties available for sale, offers $20,000 to $30,000 above asking price.  It's not confined just to inner suburbs but is also happening in the fringes. 
4..The trend shows that unemployment is reducing not increasing.  Anybody who is healthy and wants a job can get one easily.  My son works in a very large Australia wide recruiting agency and the general feeling is that there is still a desperate shortage of all types of labour.

Properties worth about $700K in Manly/Wynnu/Stafford/Alderley are not a true reflection on what is going on in the market in Brisbane. I've just had a look at Brisbane's median house prices (as provided by Residex) for the 3 months ended 30th November.  Prices increased by about 6.04% which is more than the previous 3 months.

You need to read the total article not just use figures which suit your arguments.  Note in the article that you quoted from (see below) that employment has increased by 52,600 when they expected only 20,000.  The increase in unemployment was probably due to the increased number of people looking for work.  Every credible economist and statistician would conclude that the employment situation is improving not worsening.

Economists had expected the November jobless rate to return to 4.2 per cent, but hadn't counted on a record number of people actively looking for work.

The number of people in work in November surged by a seasonally-adjusted 52,600, bolstered by a 44,400 increase in part-time workers.  Full-time workers rose by 8200. Economists had expected a 20,000 increase in employment.

Australia's economy is very healthy at the moment, not deteriorating as you seem to suggest. 

I'm not too sure what you are trying to get at with the above comment.

A couple of years ago when the issue of the economics of this boom were discussed on this board a member stated that a slump/correction would not happen until we had a trigger, and went through the last couple of slumps as examples.

We now may see the trigger in the distance. The current maket has been driven by unprecedented demand. For the first time property investment needed no capital as shown by posts on this board by people relying on centrelink who started on their portfolio.

This segment has relied on the 100% + loans. 

If the powers that make such decisions perceive that the greater risk in the market means that debts could be reduced to 90% even then we could see some adjustment. If that figure drops lowers than 90%, it could suck out enough buyers to slow the growth. Actually I think less than 85% would make very interesting viewing.

The typical refinace strategies relied upong by many will fail, as they will have finally maxed their card (house equity)

Many property investors who have relied on increased equity to cover their neg gearing will be faced with unloading or finding some temporary cash shortfall ( expensive) and hope the loans will loossen up before even more equity disappears.

Too many of the above, could push enough to sell property to ease demand, and also to change the perception that the market will run forever.

The debt issue will have some fallout in big business as many of these equity buyouts from recent years are coming under pressure. ( I myself have benefited as my biggest client was prepping for a 20mil + sale this June that has now evaporated – propably will now keep the S6 after all)

Enough of the above may encourage enough consumers to pull in the belt, and that could trigger a negative wealth effect and public perception on property as seen in all prior booms.

I know that China and India still have steam , but not sure if our economy could whether a cooling in consumption

From the look of the banks now trying to cover their margins I have to wonder about Wizard etc and how much margin they now have left.

The stock market is driven by a bunch of kids who don't  know how to make money other than in a Bull market and we seem to oscilate between 6300 -6700. Maybe the bull run is finished there too. And I know that China etc has steam, but the brokers have factored all of that current growth and more into the current prices.

This was the year that the crunch was predicted by the long term forecasters back in around 2000. Be interesting to see how it plays out