Australia is not facing a house price bubble but a severe affordability crisis, a US analytics company says.
Speaking to Real Estate Business, Core Logic group executive George Livermore said the US property market faced a burst bubble during the GFC when borrowers chose to strategically default on their loans because of the dip in unemployment and the non-recourse mortgage trend.
“Some markets, like in Arizona, Florida and California, suffered a big price drop because underlying demand was never really there, so prices fell to where the underlying demand was,” he said.
“We’ve had a decade of overbuilding, over four million too many houses in the US, and it’s going to take some time to have demand back in the system,” he said.
Unlike the US market, Mr Livermore said Australia’s issue was more about average Australians being unable to buy into the property market because of a lack of supply.
“Affordability is not the same issue as a housing bubble,” he said.
“I hear talk about a housing bubble but I don’t think Australia is facing one.
“The government needs to address the issue of affordability through further supply,” he said.