The Morrison government will crush the real estate market

I read dodgy reviews of my time but Ticky Fullerton dropped a load today:

If Scott Morrison tears victory from the jaws of defeat on May 21, it will be because of inflation.

Just three months ago, such a victory was hard to imagine, but look at what has happened since.

Food and grocery prices are rising. Mortgage rates rise ahead of an expected RBA rate hike in June, the first in more than a decade.

Gasoline prices, although they fell last week even more than the 22-cent bowser tax cut, have risen dramatically this year as the energy crisis grips global markets.

Yet real wages have not risen and Australians are not convinced they will rise anytime soon.

If the electorate gets the message that Labor spending will be high, with no better solution to wage growth than the Coalition, and if they get the message that higher spending means higher inflation, then there is every chance Scott Morrison’s rotational power gets him through the line.

So the opposition is going to lose the election due to cost of living pressures that it has nothing to do with it?

If so, John Howard would have won the 2007 election in a landslide as he promised, but failed to deliver low interest rates, due to outrageous spending by the Labor Party of the opposition.

In short, this analysis is a triumph of myth over reality.

How hard will it be for Labor to blame the Morrison government for this as its run across the country drops $16 billion in handouts to fringe voters?

14 interest rate hikes by mid-2023 are now priced into futures markets thanks, in part, to an unproductive hog-spitting budget.

The RBA itself has confirmed that this will drive property prices down. Starting on Friday FSR:

After nationwide house prices rose 22% in 2021 (the highest annual growth rate since the late 1980s), the pace of house price growth has moderated across most markets in early 2022. It is important for lenders and borrowers to consider the potential for lower house prices, especially for high LRV loans. Housing demand and price prospects are uncertain due to a range of factors, including significant changes in population growth. Future increases in interest rates could also weigh on prices for housing and other assets. Estimates based on a housing market model that takes into account historical relationships between interest rates and demand and supply factors suggest that a 200 basis point increase in interest rates from current levels lower real house prices by about 15% over two years. period of the year, relative to the baseline model projection in the absence of an interest rate shock.

Add six more rate hikes and pick a falling number for house prices, which would keep falling until they reached an equilibrium price triggering a massive purge of household balance sheets.

Specifically for the election and its rhetoric, this is what the Morrison government has delivered: the steepest interest rate hike outlook in modern history that will crash the housing market.

It is the diametric opposite of what pushed Morrison over the line in 2019, namely fear of the impacts on house prices from the Labor Party’s tax reform platform, which is now long abandoned.

Cost of living pressure to save Morrison, my ass, Ticky.

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Penny D. Jackson