{"id":35587,"date":"2021-11-15T08:53:04","date_gmt":"2021-11-14T19:53:04","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=35587"},"modified":"2021-11-15T08:53:04","modified_gmt":"2021-11-14T19:53:04","slug":"why-a-huge-surge-in-us-inflation-could-cause-australian-house-prices-to-drop","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/why-a-huge-surge-in-us-inflation-could-cause-australian-house-prices-to-drop\/","title":{"rendered":"Why a huge surge in US inflation could cause Australian house prices to drop"},"content":{"rendered":"

PHOTO: Australian property market<\/strong><\/p>\n

The Australian property market<\/a> has for many years defied the laws of gravity. But is that all about to change?<\/p>\n

Analysts are warning a huge surge in US inflation has potential to derail the Australian property market.<\/p>\n

The US central bank is expected to respond by raising interest rates sharply and analysts say that will flow through to higher Australian mortgage rates.<\/p>\n

The property market is influenced by more than just interest rates, but the fear is that the increase in fixed rates, combined with tighter macro prudential regulation, will knock the wind out of the market. Let’s explore this further.<\/p>\n

Has the inflation genie escaped the bottle?<\/h2>\n

When inflation begins rising, economists often express concerns about the “inflation genie”.<\/p>\n

What they mean by that is\u00a0that once inflation \u2014 the general rise in the level of prices for a basket of goods throughout the economy \u2014 starts increasing, it’s hard to keep a lid on it.<\/p>\n