Australia property bubble? 27 experts said, It’s ok. 1 said, ‘It will burst’

In 2016, the property prices in Sydney grew 16 percent vs a year earlier. No typo, it’s in double digits. Nope, their household incomes did not rise by double digits. It rose only by single digit. During the same period, the property prices in Melbourne grew 11.8 percent. We can read two articles about it here: abc.net.au and here: afr.com.  Another report showed Sydney’s property prices grew 15.5 percent and Melbourne’s by 13.7 percent. The article by smh.com.au is here. Australia is a favourite destination for foreigners looking for quality of life. An earlier report showed that nearly a third of all apartments being built were bought by foreigners. Yes, Chinese from China is the largest group. Read here: Crazily hot,28% of Melbourne apartments bought by foreigners 

Based on the article by smh.com.au, in a survey conducted among 28 experts, only one is predicting a property bubble bursting. He is Economist Steve Keen, now based in Kingston University London. His reasons for saying so? He shared, “Mortgage debt in Australia has gone from 80 per cent of GDP at the time of the GFC to 95 per cent today – one of the 3 highest levels in the OECD.” Note though that he is alone. The other 27 said there is no possibility of a property bubble bursting. Some reasons stated as follows. RBC Capital Markets Su-Lin Ong says, “Population growth, particularly in Victoria, will continue to underpin the housing market.”  HSBC’s Paul Bloxham says, “We expect Sydney and Melbourne housing prices to continue to rise in 2017, albeit at a slower rate than in 2016. We see single digit housing price growth in both markets.” Do read the rest in the article here. 

home-pricesFor some of us who love Australia and is really seriously thinking of getting a property as a long term investment, Western Australia (Perth)’s property prices are actually dropping. Read here: news.com.au The major reason stated was due to the loss of jobs available, thus reducing the demand and suppressing the prices. It even said that should the Labour party (Australia) wins, then this job reduction will be reduced even more! Beyond just Perth, there are also other smaller cities which is showing a decline in prices. The only issue may be what if this is continuous even after we have bought one? This is the reason why property investments must also include some study about the state of the economy of the particular country. As long as we are confident of its long term GDP growth, then the property prices should rise, it’s just a matter of time. Happy reading and following.

written on 4 Feb 2017

Next suggested article:  Median home prices – Australia cities (by Corelogic)

 

3 thoughts on “Australia property bubble? 27 experts said, It’s ok. 1 said, ‘It will burst’

  1. If one wants to buy highrise apartment in Australia, Perth and Brisbane CBD areas are safe buys now as compared to Sydney and Melbourne. The property prices of these two big cities have overrun themselves. To say there is no bubble esp. in these two cities is a big lie. The prices are chased up by the Chinese who are siphoning their cash out of their country when Chinese President Xi started clamping down corruptions in China.

    The Chinese loves Sidney and Melbourne. Foreign Investment Review Board ( FIRB), the Australian approving authority for foreigners purchasing properties are actively looking into breaches of these purchases. The Australian banks have also tightened loans to foreigners recently, much worse than the Malaysian banks squeezing buyers. The Australian states are also the increasing the taxes esp stamp duties for foreigners.

    For Malaysians wanting to buy into Australia, stay away from these two cities until the storms subside. There is a big possibility of bubble bursting when the flows from the Chinese yuans are scuttled. China is now clamping down the outflows of yuan out of the country esp illegal money.

    As you have rightly pointed out, Australian’s real salaries did not go up at all for the last few years but property prices have gone up by double digits. Even the Federal and States Govt are concerned.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s