The RBA Cash Rate and the Correctional Crash

The RBA argues the neutral cash rate is actually 3.5%. So if you use that number, then house prices are still 13% overvalued. Even after the decline in house prices, we're still confronting an asset class that's 8 per cent overvalued. But on that basis, evaluations are about right today and the market's not overvalued. If you're like me, you think in the medium term, the RBA will have to normalize the cash rate. The market's still a little bit expensive.