Housing price boom unlikely

AMP Capital Investors chief economist has warned home owners not to hold their breath for a boom-like recovery in house price.

Shane Oliver, speaking to The Australian today, said that while house prices have begun to rise again in recent months, the expense of housing by global standards would suggest another boom is unlikely.

The ratio of the average house price to median household income in Australia was roughly double that in the US, Mr Oliver said, and as a result, he believes it is hard to see a housing price bubble starting up again.

“With household debt levels remaining very high, a re-ignition of the housing bubble – to the extent that it would have to be funded by even more debt – would be a worrying sign,” he said.

Last week, Reserve Bank of Australia governor Glenn Stevens warned of the dangers of unsustainable price rises due to cheap debt and limited supply.

 

 

AMP Capital Investors chief economist has warned home owners not to hold their breath for a boom-like recovery in house price.

Shane Oliver, speaking to The Australian today, said that while house prices have begun to rise again in recent months, the expense of housing by global standards would suggest another boom is unlikely.

The ratio of the average house price to median household income in Australia was roughly double that in the US, Mr Oliver said, and as a result, he believes it is hard to see a housing price bubble starting up again.

“With household debt levels remaining very high, a re-ignition of the housing bubble – to the extent that it would have to be funded by even more debt – would be a worrying sign,” he said.

Last week, Reserve Bank of Australia governor Glenn Stevens warned of the dangers of unsustainable price rises due to cheap debt and limited supply.

 

 

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