RBA gets housing wrong, again

In The AFR I explain how the RBA keeps on getting the housing market wrong, over and over again---since 2012 it has claimed its relentless interest rate cuts would not lead to double-digit house price inflation, a substantial leveraging up of household balance-sheets, or create any financial stability problems, and yet all these issues have manifest strikingly, as we repeatedly predicted. When the RBA cut rates in May and August it told us it could do so because the housing market was cooling, house price growth was "moderate", and there was no risk of further inflating the burgeoning bubble. When this analysis proved to be embarrassingly wrong, the RBA created a faux debate about data quality after telling folks we have the best housing data in the world. The biggest miss, however, has been its argument that much lower sales turnover in Sydney and Melbourne signals weakness, when in fact it highlights strength as I prove in my column. Free (VIEW LINK)