Morning Report Thursday 12 June 2014
**RBNZ increased their cash rate this morning by 0.25% to 3.25%, its third increase since March this year**
Please see this week’s Market Matters Videos:
• The retail space• ECB stimulus and negative interest rates• Market update - updated view• Membership changes
Today’s headline in the Australian Financial Review today is “Aussie Housing Prices second most expensive.” The IMF is becoming concerned that we will see the re-emergence of property inflation and a repeat of the 2008 global financial crisis, another example of journalists loving a “scare monger” headline. Australia may have the second most expensive housing market in the world, behind Belgium, but I would argue we remain the best place in the world to live and the 238,000 people who moved to Australia year ending March 2013 obviously agree. I do not believe the 15% gain in Sydney prices last year will be repeated too often, but an increasing population will obviously be very supportive of property prices. The large factor of Mortgage Insurance provides an incredible buffer to the banks from retail property in terms of bad debts, but their income growth may obviously come under significant pressure if property were to ever fall. Another headline that my simple response is don’t panic.
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