The Australian Financial Review --- Page: 53 : 6 March 2008 Original article by Robert Harley
LexisNexis Summary
Australian housing may become more affordable, the hard way. The Reserve Bank of Australia (RBA), by raising interest rates, may begin to affect the price of houses. Inflation in Australia is high, and the RBA board is determined to reduce inflation. The RBA will raise interest rates until demand cools, and there are signs that demand is cooling. It is likely that as interest rates get higher, more and more Australians will be unable to afford a house, or will lose the house they have a mortgage on. This will gradually force down the price of houses. Australia's equity markets are volatile, and the housing market could be next. If Australian employers stop hiring, more people will be too fearful about their jobs to take on any debt and house prices will fall.
