Hi guys,
Now I know I have a lot of experience in property but as you might guess there are some scenarios I have never seen in my experience.
One of those is a rapid period of higher inflation.
Is there anyone on the forums who is old enough to remember what the 1972 inflation was like .. and how fast it happened?My gut feeling at the moment is that the markets are locking up and preparing for ‘something’ but its really like something I have never seen before in my lifetime (I’m only mid-40s)
Can anyone relate to me what the rapid inflation in the early 1970s was like .. and the timescale in which it happened?
This would be of much help to me.
Do you think we’re going to go into an inflationary period in Australian property?
(or rather do you think we’re going to go into an even more inflationary period than we’re already in?…..)
RBA and the money markets seem to think otherwise at the moment.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Historically the bounce back from a long period of little growth or no growth has been a rapid spiral back up of inflationary pressure. Unless historical bookmarks of previous events cant be relied on .. it looks very much like something similar is about to happen soon. This is why the 1972 inflation is so important .. its very similar conditions to what we have now and it was an enormous rise in inflation over the period 1972-1975.
This comes from a general lack of reliance on the state of the existing currency by the larger population.
And yes .. I find a downturn to extremely low rates very worring as it means that a lot of people who CAN afford to borrow in the current economic conditions end up gearing themselves heavily again. And this would lead to a repeat of similar circumstances to what happened in the US, where even the most minor movements render the majority of the borrowers on variable loans extremely vulnerable in the near term after such an event.
In other words .. I would love to say that a burst of inflation is going to happen for all the right reasons. But I think its most likely to happen for all the WRONG reasons.
RBA and the money markets seem to think otherwise at the moment.
Uhm We’re at record Dow 18,000 levels, Sydney property due to go up 10-15% this year. Apartment in NY sold for $100m (now talking about one in the Sony building listing for $150m).
The USA fed feels no need to stop throwing fuel on the fire and Europe about to start their own QE so they can balance the books…..I’d say we are in a highly inflationary period right now…….regardless of what the RBA would have you believe.
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