For me it isn’t if..but when, and as sure as night follows day, the Chinese economy will slow and enter a recession at some point.

Why do people always seem to latch onto the belief that there is such a thing as a “miracle economy”? There isn’t..all economies go through cycles, it is just a matter of how bad or good they are.

I think governments and companies do pause momentarily to consider what might happen if China slows down and/or house prices come off the boil somewhat. But then they just shake their head and say “nah, that won’t happen to us – we’re Australia and we’re different” and just plough on. I reckon the alternatives are just too scary to contemplate, so it’s easier to pretend the issues aren’t there.

I too was a little shocked at what happened to house prices. The FHOG was probably even more successful than anyone intended it to be. We now just wait to see what the reaction is now that so much demand has been brought forward. My gut feel is that Dudd & Goose will be $hitting themselves at the thought of reduced take-up of credit that they’ll be seriously considering what form of stimulus they can bring in to keep house prices high.

Everyone said that 2009 was the year to watch, but with the stimulus in all its forms finally washing out, I think 2010 really will be the interesting one.

Panic buying and momentum before the scale back of the FHOG?
Its remarkable how strong housing prices have been.

We can clearly see again today how economic events in China have a big impact on investor confidence in Australia. If investors continue to remain spooked then this will have an impact on the real economy.

Personally I thought 2009 would have been tougher on the Oz economy, but maybe 2010 could be the year the GFC really hits Down Under?

Yeah I agree. I think from memory we were both stunned as to the RBA raising in the first place. They like to be first for the sake of it?

“They should also allow the higher rates and the reduction in the first home buyers grant to trickle through…surely this will slow down house prices this year or?”

Hmm…logic would suggest that house prices should come down, but I wouldn’t be surprised if we’re wrong again !
I cant see any realistic catalysts that could cause a house price rise, but as Paul Tudor says the last 30% of the rise is usually pure irrationality with no explaination.

“Anyway I was not that nervous about house prices last year but I am this year. After reading the article you posted I am even more nervous!”

Yeah its amazing how people can go from bearish to complacent. 33% to 3% and nothing has changed The bubble is now bigger !

Will be interesting to see how events unfold.

They should also allow the higher rates and the reduction in the first home buyers grant to trickle through…surely this will slow down house prices this year or?

Anyway I was not that nervous about house prices last year but I am this year. After reading the article you posted I am even more nervous!

Ominous signs for Australian housing?
“Just 3 per cent of people expect home prices to fall this year, compared to a third who were expecting prices to fall when surveyed early last year, according to the latest Westpac-Melbourne Institute Consumer Sentiment survey.”
http://www.smh.com.au/national/house-sales-on-the-boil-as-confidence-returns-20100122-mqou.html

Do you think the RBA will raise rates at next meeting Greg? I see new housing finance fell off a cliff recently.