Joye: RBA actions will distort the decision making behaviour of investors

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Chris Joye, Co-Chief Investment Officer at Smart Money Investments, says he has had to upgrade his forecasts for Australian house price growth in 2016. Joye says property values have surged 4% over the last quarter alone with the 12 month increase in property values hitting 10%. "You can now get home loan rates for 3.7%, auction clearance rates are 'storming' in Sydney and Melbourne and I don't think there is any doubt that the 2nd half of the year is going to get a significant tailwind given the RBA's excessively accommodative monetary policy." Joye believes that fundamentals have little to do with the surge in property values. In Australia 80% of home loans are variable rate, this means that the sector is particularly sensitive to the moves from the RBA. With bond markets calling another rate cute in the second half of 2016 Joye says the outcome is likely to be "significant distortions in the decision making behaviour of investors." &

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