Other countries economic policy push up Australia housing price
Date：2014/07/29
[epochtimes] According to the Australia real estate observation, reported that quantitative easing house policy is the motivating factor for increased of housing price in developed countries.
Conclusion of the recent report of International Monetary Fund showed that the ratio of housing price and income in Australia ranked third in developed countries. When assessment based on historical data, the ratio of housing price and income are ranked fifth. This obviously means that Australia housing has been fully reflected.
Asian Development Bank recently released an article noted that housing price for Hong and India have nearly doubled up from year 2008-2012. The bank concluded that long term quantitative easing policy has play a significant role for capital inflow to Asia Pacific region. Capital inflow is expected to bring two results: rising of currencies or rising of property value. Housing price increase strongly in the situation that undesired of currency appreciation.
Australia has been consider as an attractive investment destination for a long time period. Unites State, Japan and Europe very low even zero interest rates have prompted international capital inflow to Asia Pacific region, including Australia. These inflow capital have been part of or direct access to real estate market.
Therefore, the Reserve Bank of Australia is in trouble. Although the bulk stock’s price fell, but the Australian dollar remains strong, reflecting the movement of capital. If the Reserve Bank try to raise interest rate to curb the housing price, Australian dollar will become stronger. Need to have an alternative monetary policy, or specifically targeted at reducing loan, or restrictions to house ownership.
Quantitative easing policy at major development countries has push up Australia’s housing price.
In the ongoing of quantitative easing policy, Australia will be powerless to prevent overflow of capital asset investment, including housing, unless the Australian dollar rise again. And in the case of weakness in bulk commodities, Australian dollar is unlikely to rise.
Only when quantitative easing policy stopped, all premium sector of housing price will be removed. This will begin in 2005 from United State. In the meantime, the situation of high housing price will continue exist.