Housing Bubble Unlikely in Australia

July 10th, 2013

Australia is not expected to experience a housing bubble, according to industry experts.

Both Citi Research and economist Saul Eslake said that it is unlikely the country is at risk of a housing bubble reforming, according to information from Property Observer.

A report by Citi Research anticipates a rise in house prices before March 2014 before a smaller drop. The reports said that its prediction of fluctuations in house prices in Australia is based on movements in Chinese immigration and the Chinese economy as well as the value of the Australian dollar.

Eslake, chief economist at Bank of America Merrill Lynch, does not necessarily agree with the correlation between house prices here and Chinese influences. However, he is interested in the research, and concedes that Chinese GDP growth is heavily correlated with many economic movements in Australia.

Eslake said that signs of a housing bubble developing could be managed by mandating lower maximum loan-to-value ratios and shorter mortgage terms.

Source: http://www.propertyobserver.com.au/residential/little-chance-of-housing-bubble-building-in-australia-but-china-effect-may-be-overstated-saul-eslake/2013062762751