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Economist warns RBA: leave rates alone

By webmaster 09 August 2011 | 1 minute read

A series of rate hikes could cause Australian property prices to collapse, AMP’s chief economist Shane Oliver has claimed.

Speaking to Smart Property Investment, Mr Oliver said Australian consumers are currently very cautious and any sudden rate hikes could force them to retreat even further from the property market – causing prices to fall.

“Australian housing is very expensive and overvalued, especially in comparison to the United States. When properties are overvalued, there is an inherent risk that values will suddenly fall,” he said.

“But while properties are undeniably soft at the moment, they are not collapsing and that is because you need a trigger to create a collapse.

“If the RBA raises rates that could create a trigger and we could see prices fall by as much as 20 per cent.


Mr Oliver said the RBA had made it clear that they are happy to leave rates on hold for the foreseeable future.

“Leaving rates on hold means there is no trigger for a property price collapse.”



Rates refer to a fixed price or an amount charged by sellers or providers for their goods and services.

Economist warns RBA: leave rates alone
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