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You could be waiting a while. If a government with good control over a sovereign currency doesn't want a housing crash to happen, it can forestall it for a long

You could be waiting a while. If a government with good control over a sovereign currency doesn't want a housing crash to happen, it can forestall it for a long, long time by keeping interest rates low. People were predicting a housing crash in the US starting in 2003, and people have been predicting one in Australia for a decade.

brad0 9y ago
What can force an interest rate rise? Right now I can’t afford a house and would love to know the conditions that would increase interest rates.
- lotsofpulp 9y ago
  Defaults can cause interest rates to rise, which happen when expectations aren't met. Such as labor costs rising more than expected, causing businesses to default on their loans or shortage of a natural resource causing it's price to spike. It can then cause a chain reaction of defaults and interest rates rise to reflect the increased risk premium. Unfortunately, due to lags in the feedback loop, this is inevitable as you can never accurately predict the future.
- AlexCoventry 9y ago
  If inflation gets too high, the government needs to find a way to take money out of the system, and raising interest rates can help to do that. Raising taxes can, too.
Qwertious 9y ago
>People were predicting a housing crash in the US starting in 2003, and people have been predicting one in Australia for a decade. That's because of negative-gearing. Basically, mortgage payments are tax-deductible. So if you have a house and rent it out, then you can take the tax, use it to pay off the mortgage on the house you're renting, and not pay any tax on it at all. This, naturally, makes investment housing a much better deal than it should be, and discourages selling a house (thereby driving up housing prices, and therefore rent prices, thereby making investment housing more lucrative). It's broken bullshit. Blame the (main right-wing party) Liberal party. Sometimes I wonder whether the parties in Australia are named just to screw with Americans - the Liberal party is conservative, and the Labor Party is officially spelled with the American spelling, despite "labour" normally having a U in it, here.

brad0 9y ago

What can force an interest rate rise? Right now I can’t afford a house and would love to know the conditions that would increase interest rates.

lotsofpulp 9y ago
Defaults can cause interest rates to rise, which happen when expectations aren't met. Such as labor costs rising more than expected, causing businesses to default on their loans or shortage of a natural resource causing it's price to spike. It can then cause a chain reaction of defaults and interest rates rise to reflect the increased risk premium. Unfortunately, due to lags in the feedback loop, this is inevitable as you can never accurately predict the future.
AlexCoventry 9y ago
If inflation gets too high, the government needs to find a way to take money out of the system, and raising interest rates can help to do that. Raising taxes can, too.

Qwertious 9y ago

>People were predicting a housing crash in the US starting in 2003, and people have been predicting one in Australia for a decade. That's because of negative-gearing. Basically, mortgage payments are tax-deductible. So if you have a house and rent it out, then you can take the tax, use it to pay off the mortgage on the house you're renting, and not pay any tax on it at all. This, naturally, makes investment housing a much better deal than it should be, and discourages selling a house (thereby driving up housing prices, and therefore rent prices, thereby making investment housing more lucrative). It's broken bullshit. Blame the (main right-wing party) Liberal party. Sometimes I wonder whether the parties in Australia are named just to screw with Americans - the Liberal party is conservative, and the Labor Party is officially spelled with the American spelling, despite "labour" normally having a U in it, here.