No housing market bubble says Australian Bankers’ Association
The Australian Bankers’ Association has reported that there is no evidence of a property bubble in the Australian housing market, despite strong growth of house prices spurred on by low interest rates.
The report entitled Key Truths on Housing in Australia analysed changes in house prices over the past 25 years, the main influences on house prices and the state of household finances.
“Our analysis shows that the recent rise of house prices in Australia is not unusual when compared with historical trends, and the current house price growth has not exceeded the peak rates we saw before the Global Financial Crisis,” said ABA Chief Executive Steven Münchenberg.
“Since the GFC, volatility in prices has increased, with two periods of quite marked national declines in prices followed by strong rebounds.”
“Much of the recent focus has been on strong house price growth in Sydney, but over the past ten years the price increase in Sydney is unremarkable when compared with other capital cities.”
The report also indicated that low interest rates were a significant contributor to the current strong state of household finances with Australian households on average well placed financially to brave any increase in financial pressure including a rise in interest rates.
“The value of household assets is greater than the value of household debt - for every $1 of debt held by Australian households today, they have almost $6 of assets. Additionally, latest figures show that households are, on average, 21 months ahead of their scheduled mortgage repayments,” said Münchenberg.
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