Peter Gordon Dip.FP. & Dip.FMB.
e peter@investoproperty.com.au
Ph: 0401 214 134

Is Australia in a Property Bubble?

Sunday, 12th January 2014

 

I would like to share a recent article Is Australia experiencing a Property Bubble? by Melanie Timbrell at MyWealth where she looks at that topic that tends to consume Australians being Property Prices.

Lets have a quick look at what a ‘property bubble’ is and if in fact we are in one.

A ‘property bubble’ occurs when there is an increase in property prices driven by increasing demand, speculation and thinking that prices will continue to rise into the future.

The ‘bubble will burst’ when you add to this an increase in supply of property available for sale and then something to impact demand such as an interest rate rise.

So what do the experts think? AMP Capital’s Chief Economist Shane Oliver says we are not in a bubble. Savanth Sebastian Economist at CommSec believes ‘That trigger which would drive the devaluation of property could be one of two things. The first is a surge in interest rates which is unlikely given the RBA has been cutting interest rates and believes inflation is well contained. The second would be an increase in unemployment, massive job losses would mean people rethinking paying off their property. It is very hard to see unemployment going past 6% and I think that seems to suggest property will remain relatively resilient’.

I have shared with you the main points from the article, please read the full article here Is Australia experiencing a Property Bubble? It is well worth a look. If you would like to know more about property prices and where we think they are heading then please contact peter@investoproperty.com.au