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  • » What will happen to AUD if the housing bubble bursts

#1 2016-04-13 00:46:13

billybob888
Silver Stacker
From: Australia
Registered: 2014-01-08
Posts: 1,509
Trades :   154 

What will happen to AUD if the housing bubble bursts

Im just curious as to what will happen to the AUD should the housing bubble burst, with rising unemployment and mortgage default.

Would the AUD rise due to the deflationary crash or will the AUD crash from flight of capital and lack of confidence in the aussie economy?

Opinions and past examples please

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#2 2016-04-13 01:05:33

BuggedOut
Member
From: New South Wales
Registered: 2015-07-21
Posts: 1,772
Trades :   36 

Re: What will happen to AUD if the housing bubble bursts

Depends on what your "bubble burst" looks like, but I'd expect it would be AUD going down.

In my opinion any major decline in housing is going to wreak havoc with the Australian banks balance sheets and also put great pressure on the government to intervene to prop it up.  It would be likely the banks and government would be facing a downgrade of credit rating from the all important AAA and this would be another trigger for major currency flight if the bubble burst itself wasn't enough to trigger panic.

Of course if the "bubble burst" scenario is in the context of a wider (global) crisis of some sort there is every chance the AUD will hold up.  It's all relative.

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#3 2016-04-13 01:30:34

raven
Silver Stacker
From: Victoria
Registered: 2014-04-27
Posts: 1,215

Re: What will happen to AUD if the housing bubble bursts

Has the property market ever collapsed in this country, can't remember myself.
Might have flattened out, but never had a "bursting bubble"
Even 1987 stock market crash, was ridden out ok !

There are approx. 75,000 new residents settling in Victoria each year, and so, where do they stay ?
What do you actually call a bursting bubble ?
And also, who cares ?

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#4 2016-04-13 01:41:13

billybob888
Silver Stacker
From: Australia
Registered: 2014-01-08
Posts: 1,509
Trades :   154 

Re: What will happen to AUD if the housing bubble bursts

raven wrote:

Has the property market ever collapsed in this country, can't remember myself.
Might have flattened out, but never had a "bursting bubble"
Even 1987 stock market crash, was ridden out ok !

There are approx. 75,000 new residents settling in Victoria each year, and so, where do they stay ?
What do you actually call a bursting bubble ?
And also, who cares ?

Not trying to turning this into a debate about housing, you can believe houses will keep going up forever if you want, but my question is what if it bursts and its impact on the AUD

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#5 2016-04-13 01:42:01

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,635
Trades :   232 

Re: What will happen to AUD if the housing bubble bursts

raven wrote:

Has the property market ever collapsed in this country, can't remember myself.
Might have flattened out, but never had a "bursting bubble"

Apparently it has. Albeit 125 years ago. But you know, it'll definitely happen again.

1891 Crash thread

Last edited by House (2016-04-13 01:43:05)


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#6 2016-04-13 01:46:42

raven
Silver Stacker
From: Victoria
Registered: 2014-04-27
Posts: 1,215

Re: What will happen to AUD if the housing bubble bursts

billybob888 wrote:
raven wrote:

Has the property market ever collapsed in this country, can't remember myself.
Might have flattened out, but never had a "bursting bubble"
Even 1987 stock market crash, was ridden out ok !

There are approx. 75,000 new residents settling in Victoria each year, and so, where do they stay ?
What do you actually call a bursting bubble ?
And also, who cares ?

Not trying to turning this into a debate about housing, you can believe houses will keep going up forever if you want, but my question is what if it bursts and its impact on the AUD

Ok, nothing !
smile

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#7 2016-04-13 01:48:49

raven
Silver Stacker
From: Victoria
Registered: 2014-04-27
Posts: 1,215

Re: What will happen to AUD if the housing bubble bursts

The value of the AU$, is directly proportional to the Federal Reserve's dictation, to the Reserve bank of Australia, and with regard to the setting of interest rates.

Last edited by raven (2016-04-13 01:59:24)

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#8 2016-04-13 01:59:26

Skyrocket
Silver Stacker
From: Melbourne
Registered: 2014-07-20
Posts: 4,849
Trades :   36 

Re: What will happen to AUD if the housing bubble bursts

billybob888 wrote:

Im just curious as to what will happen to the AUD should the housing bubble burst, with rising unemployment and mortgage default.

Would the AUD rise due to the deflationary crash or will the AUD crash from flight of capital and lack of confidence in the aussie economy?

Opinions and past examples please


Can we go by example from other nations recent housing collapse to see what happened to their currency? ex USD

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#9 2016-04-13 02:29:43

raven
Silver Stacker
From: Victoria
Registered: 2014-04-27
Posts: 1,215

Re: What will happen to AUD if the housing bubble bursts

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#10 2016-04-13 03:06:15

JulieW
Silver Stacker
From: Australia
Registered: 2010-10-14
Posts: 11,086

Re: What will happen to AUD if the housing bubble bursts

House wrote:
raven wrote:

Has the property market ever collapsed in this country, can't remember myself.
Might have flattened out, but never had a "bursting bubble"

Apparently it has. Albeit 125 years ago. But you know, it'll definitely happen again.

1891 Crash thread

It's a good example but I think the historical markers are a bit different.
I'm in the flatten, increase, decline, increase camp as per PJ Anderson's property clock.

As for AUD.

Like a stone.

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