Happy days for the housing market: less than one rate hike priced for 2011!

According to Christopher Joye CEO of Rismark we will get less than one rate hike in 2011, if you believe the interest rate futures market.

That will be a huge boon for Australia’s housing market, if it actually comes to pass.

In his blog Joye says:

Rismark forecasts assume three rate hikes, which would make generating capital gains heavy going indeed.

But if savvy fixed income investors are correct, and we don’t get a rate hike in 2011, then the housing market could very much surprise on the upside with nominal price rises.

We will have booming national incomes, strong employment and wages growth, and a cost of capital that is only marginally higher than the historical average. Throw in very strong economic growth in the US and China to boot.

That means consumer spending should bounce back firmly by the middle of the year, and credit growth will also recover (pushed along by all the financial institutions trying to drive their credit books).

Great news for the banks and housing investors…If you believe the futures market, that is, which, for the record, I don’t!

Source: Aussie Macro Moments 


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