July 21, 2010, Australia – In recent news and events stated the unfortunate predictions on house prices rates in the market and industry. According to Economist Steve Keen had to leg it 230km from Canberra to the top of Kosciuszkol, after losing a bet on Australian house prices. He added that the report showed that the average house prices went up rather than down 40 per cent, after the Reserve Bank fearing a big recession in 2009 collapsed mortgage rates from 9 per cent to 5 per cent. This according to him the process and method has been doing something wrong that the return of investment is still low.
However even most observers think that there is a good result there will be a bad news in regards with the increasing on mortgage rates. One investor Jeremy Grantham stated that calculation of his own showed that housing trades near 7.5 times family income today versus about 3.5 times in earlier times. The house price supposedly must be twice on the rated and then return to its normal rated.
The Reserve Bank estimates Australia’s price-to-income ratio is near five times income, not seven times, removing any need for home prices to fall that first 30 per cent.
Source: The Australian News
