UBS analysts said in a report earlier this week thatthe “significant growth in negatively geared investment property over the last 20 years should be of concern”. The analysts warned that Australian banks have more investment property in New Zealand and the UK – 32 per cent compared to 20 per cent and 12 per cent respectively. “We believe that Australia’s large exposure to a very highly leveraged landlord population is a significant systemic risk.
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Fed Not Tapering Should Boost Canada’s Housing Market
Federal Reserve chairman Ben Bernanke announced that there would be no tapering of bond purchases on Sept. 18. Expectations had been building since May that the Federal Open Market Committee (FOMC) would announce at their September meeting a reduction (taper) in the $85 billion a month of U.S. Treasury and mortgage-backed securities the Fed had been purchasing. No tapering was a real shocker to financial markets. Not only did Bernanke seemingly de-emphasize the role of the U.S. unemployment rate and up the focus on inflation and the broader economic outlook, he also downgraded the 2013-14 growth and inflation projections. To make a long story short, the FOMC is concerned about tighter financial conditionsmainly the sharp rise in U.S.
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