Wednesday, November 17, 2010

Australia Cascading Bubble Inputs Redux

While we await the Nov 14th clearance rate report which might let us know if sales are scrambling at the edge of the cliff or just glitching a bit, I made a quick overlay as a follow up to Cascading Bubble Inputs Australia.

Australia House Price Chart Overlaid with Terms of Trade
Input 1 is the same as everywhere else, low interest rates. Input 2 kept Australia from falling along with everyone else (the U.S. is shown for comparison). The influx of money from selling to China can be measured a few ways, but here I have included Terms of Trade from this government site. I overlaid it with the Clicks and Mortar Chart.

It's all about liquidity. Too much money chasing too little housing. And while the shortage of housing may not ease in the medium term, the excess money is less of a certainty.

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