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HS Brisbane Property
0419 782 133
+61 (0) 7 3254 0888
sales@hsbrisbaneproperty.com.au
PO Box 15301
Brisbane City East
Queensland 4002
Australia

Australian property overvalued?

The 'Property bubble' has raised its ugly head yet again in media reporting of the Australian residential property market. I vowed last year not to comment on it again in a long time however I feel I need to address the subject - or rather, let other property experts give their opinion of the whole 'property bubble' scenario.

If I got $1 for every time I read or heard about the looming burst of the property bubble in Australia by the media in the last 6 months then I wouldn't be sitting here writing this ...

The new year and the release of 2013 property stats showing very strong growth in Sydney house prices, seems to have fired up everyone in the media again on this subject.

I'm not going to repeat all the figures, facts, and reasons I've previously used to back my opinion of no bursting of any bubble - whether property or otherwise.

Instead, here are some thoughts about whether Australian property prices are overvalued and a property bubble burst is imminent or not from widely respected and prolific Australian property analysts and researchers:

"IF YOU'RE COMING TO AUSTRALIA FROM OVERSEAS, YOU MIGHT THINK OUR PROPERTY IS OVERVALUED – BUT THERE ARE GOOD REASONS FOR IT."

Cameron Kusher, Senior research analyst for RPData, feels that although Australian property does appear to be more expensive than in other countries there are population and economic dynamics and reasons as to why: centralised population, job opportunities, and restricted land releases on capital city fringes.

 

"THE ONLY CLAIMS THAT AUSTRALIAN HOMES ARE "OVER-VALUED" COMES FROM INDIVIDUALS OR ORGANISATIONS WITH ULTERIOR MOTIVES"

Terry Ryder of hotspotting.com.au always has something interesting to say, and this time he sees Australian property values more or less where they should be, based on "the strength of the economy, the wealth levels of the nation, the low rate of unemployment, the absence of over-supply (except in specific sub-markets) and the low level of interest rates." He suggests taking a careful look at who the people are who are fuelling the 'bursting Property bubble' debate.

 

"THERE HAVE BEEN TIMES WHERE THE MARKET HAS BEEN MUCH MORE OVERVALUED THAN IT IS NOW."

Louis Christopher, Managing director of SQM Research and previous research head of APM, looks at data from the last 20 years and comes to the conclusion that current property values are only slightly overvalued. Brisbane property values he says are "looking neutral – neither undervalued nor overvalued." On a national level, "there have been times where it's been much more overvalued than it is now – particularly in 2003."

 

"YOU'D BE HARD PUSHED TO FIND ACCOMMODATION ON THE FRINGES OF OUR CAPITAL CITIES FOR LESS THAN SIX TIMES MEDIAN INCOME"

Catherine Cashmore, Market analyst, looks at the actual cost of the building as opposed to the land value and the relationship of income to property price. She also feels that although property does appear to be overvalued people will continue buying as "land is a necessity to all business and commerce, as well as our personal needs - and whilst buyers are able to service the debt, there will always a market for it.". However she does heed a word of caution for the future.

The detailed article with additional interesting information can be found here.

 (Source: Property Observer, Louise Moeller - HS Brisbane Property marketing)

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