The one things nobody discusses is the west undergoing a “Japan 1990” moment and multi year deflation. There are many complexities and differences in the above economies but the fact that it isn’t discussed makes it one of those market perverse unexpected outcomes all the more real.
Without getting too philosophical - my view is that all roads eventually lead to a multi-decade deflation/low inflation world.
The west especially is saddled with too much debt and eventually will have to go through a multi decade de-leveraging cycle where the debt gets monetised (transferred from one balance sheet to another).
I agree, its pretty easy to see a Japan style scenario for Australian property & it surprises me how little it gets talked about (I couldn't tell you why...).
The thing that keeps me up at night is an outcome where the western developed markets start to behave like the emerging markets where rates go up, but asset prices go up with them - think Turkey, Argentina, etc etc.
I cant see it happen in AUS, and I think we are more likely to go through a Japan style multi year deflation event, but I have been thinking about it more recently...
Great article. Does that mean property prices drop from now till 2028 in AUD terms? Or will the RBA drop rates and will there be no nominal AUD drop in house prices, but the drop will be the AUD devalues to AUD/USD sub 40 cents?
The one things nobody discusses is the west undergoing a “Japan 1990” moment and multi year deflation. There are many complexities and differences in the above economies but the fact that it isn’t discussed makes it one of those market perverse unexpected outcomes all the more real.
Thoughts ?
Without getting too philosophical - my view is that all roads eventually lead to a multi-decade deflation/low inflation world.
The west especially is saddled with too much debt and eventually will have to go through a multi decade de-leveraging cycle where the debt gets monetised (transferred from one balance sheet to another).
I agree, its pretty easy to see a Japan style scenario for Australian property & it surprises me how little it gets talked about (I couldn't tell you why...).
The thing that keeps me up at night is an outcome where the western developed markets start to behave like the emerging markets where rates go up, but asset prices go up with them - think Turkey, Argentina, etc etc.
I cant see it happen in AUS, and I think we are more likely to go through a Japan style multi year deflation event, but I have been thinking about it more recently...
Great article. Does that mean property prices drop from now till 2028 in AUD terms? Or will the RBA drop rates and will there be no nominal AUD drop in house prices, but the drop will be the AUD devalues to AUD/USD sub 40 cents?