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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

Bubble here, Bubble there … there’s no bubble anywhere!

Periodically it raises its head, usually when property media have nothing else much to write about, but I'm really over the whole hype: Property bubble in Australia or not, is it about to burst or doesn't it exist in the first place?

Since the GFC 'Property bubble' have been the words in people's mouths as bad dynamics in the American property market started – in very simplified terms – the global financial tail-spin dive.

I've avoided like the plague getting caught up reporting about this too much as, realistically, I'd be reporting about it almost every single week. The whole discussion has pros and cons which I'm definitely not going to go into now.

Nevertheless I feel – and have maintained for quite a while now – that yes, there may been isolated oversupply in some areas of some cities especially in relation to the financial situation of the people living there, but in general I don't see the 'property bubble' spook hanging over the heads of most people, especially in my specialisation of the Brisbane CBD marketplace.

The Assistant Governor of Australia's Reserve Bank, Malcolm Edey, last week indicated to conference participants in Sydney that what is now happening does NOT constitute the onset of a property bubble about to burst, in fact it is "unrealistically alarmist" to assume otherwise.

"While house prices are increasing its part of a normal cycle of price growth and decline. Demand for housing is strengthening at the moment there's no doubt about that but it's important to keep these things in perspective.

"Looking back over the last 10 years or so house prices have risen at a rate similar to or on average less than the growth of household incomes so the ratio of house prices to incomes over that period has been roughly flat or most of the time tending actually to fall.

“Within that trend however inevitably there will be cycles and there have been periods where that ratio has been rising and periods where it has been falling, or to put it another way periods when the rate of increase in house prices have been higher than average and periods when it’s been lower than average.

“We shouldn’t be rushing to reach for the bubble terminology every time the rate of increase in house prices is higher than average because by definition that’s 50% of the time and you’re just going to be unrealistically alarmist by making that call every time that happens.”

Thank you Mr Edey, I agree wholeheartedly.

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