The Final Tightening - A Deep Dive into Interest Rates and the Land Cycle
- Catherine Cashmore
- 1 day ago
- 65 min read
For some years now – since the first round of rate hikes into 2023 – I’ve been saying the same. Despite the cuts we saw earlier this year, the easing trend would not continue.
Not at this phase of the cycle.
History makes one thing clear - land booms never end because people suddenly become cautious.
As money is siphoned away from the productive sectors of the economy into land speculation, weakening small industries and increasing unemployment, more borrowers find themselves struggling to keep up with repayments.
The end of the land cycle rarely arrives quietly.
It is typically marked by a tightening of credit, followed by an external shock – often emanating from the United States – that exposes the fragility in the system.
Rising unemployment is the tell-tale outcome, and it is this labour-market blowout that confirms the cycle has turned.
What the Sahm Rule tells us about Australian land cycles
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