Interesting thread and question.
I'd imagine the correlation between markets will be purported through: 1. Lending markets and 2. Confidence.
If a severe financial crisis erupts in Australia resulting from overleverage/overextension, i suspect correlation will be very strong and other markets will perform poorly with small contractions in prices.
If its just affordability/rate rises cooling the market down without a severe financial market event, then i imagine there to be a knock on effect to confidence and slightly lower growth the expected in other markets, but nothing dramatic.
Note sure about Sydney being within reasonable affordable bounds at the moment - using calculations of debt repayments today vs house prices doesn't make much sense. Affordability when using sensitised interest rates - i suspect we'll see a very different story to Sydney's 'affordability' then.
In this hypothetical, i suspect we'll see drastically different fall offs in value across Sydney too. It won't be a flat 20% decrease across the board. Areas where debt repayments make up a larger proportion of income could be far worse than more comfortable areas.
Cheers,
Redom
I'd imagine the correlation between markets will be purported through: 1. Lending markets and 2. Confidence.
If a severe financial crisis erupts in Australia resulting from overleverage/overextension, i suspect correlation will be very strong and other markets will perform poorly with small contractions in prices.
If its just affordability/rate rises cooling the market down without a severe financial market event, then i imagine there to be a knock on effect to confidence and slightly lower growth the expected in other markets, but nothing dramatic.
Note sure about Sydney being within reasonable affordable bounds at the moment - using calculations of debt repayments today vs house prices doesn't make much sense. Affordability when using sensitised interest rates - i suspect we'll see a very different story to Sydney's 'affordability' then.
In this hypothetical, i suspect we'll see drastically different fall offs in value across Sydney too. It won't be a flat 20% decrease across the board. Areas where debt repayments make up a larger proportion of income could be far worse than more comfortable areas.
Cheers,
Redom