Claims that Australia is in the midst of a property price bubble have been dismissed by RP Data.
Controversial pundit Professor Steve Keen has for years been forecasting an Australian property bubble, warning that values will fall by 40 per cent over the next decade, however few share Mr Kean's radical views.
Speaking to Real Estate Business, RP Data’s chief executive Graham Mirabito said what Australia was currently experiencing was a property price correction rather than a “collapse”.
According to Mr Mirabito, a housing bubble suggests housing values increased too rapidly and are set to experience a rapid decline, a fate not likely to come to fruition in Australia.
“Investors often ask us whether or not we are in a property price bubble. Given that 60 per cent of the balance sheets of the major banks are residential mortgages, investors obviously want to know whether or not Australian banks are a sound investment,” Mr Mirabito said.
“Our response is that we are not in a bubble, but a housing correction.
“While Australians definitely like debt, more than 40 per cent of mortgage holders are more than three payments in front, so we are very good payers. In addition to this, we are currently in the middle of a population boom, so there will always be demand for property.”
Mr Mirabito said Australian property prices grew 12 per cent after the GFC, now prices have fallen by approximately 3 per cent.
“This isn’t a bubble, it is a soft landing – much softer than we have seen in other countries. Over the longer term, demand will continue to be there, which means property prices will eventually rise again.”