Housing Confidence Returns

Confidence in the housing market has climbed to its highest level in 12 years, leading many to suspect the new federal government and Reserve Bank of Australia will have to contend with a property bubble.

The country’s prudential regulator has warned banks not to issue more high risk loans in response to the upturn.

Customers have been moving their money from debt repayments and savings into property investments.

Analysts are concerned that the Sydney market is ‘too hot’ for homes under the one million dollar mark. The 91% clearance rate experienced on the day of the election is seen as evidence of the shift.

Meanwhile, the wider economy is slowing and unemployment is rising, reaching 5.8% in data released last week. This has given the Reserve Bank little confidence that its recent rate cuts are stimulating the economy.

Many analysts argue that investor confidence was buoyed by the Coalition victory in the recent Federal election, but individuals will remain conservative until they feel more secure about their employment and finances.

Source: http://www.afr.com/p/national/economy/surging_housing_confidence_fuels_xqktOsVxmgZu3JfUfJwKpN