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There’s No Property Bubble | The 4 Big Bank Economists

Yes – they’re back again. Those who say we’re in a property bubble.

Including economist Christopher Joye, director of Yellow Brick Road, who wrote in the Australian Financial Review that Australia’s housing bubble leaves others far behind.

He found that since the end of 1995, Australian home values have experienced total capital gains of 283 per cent, massively outstripping any other peer country.

AFR

Source: AFR

But the 4 Big Bank Economists don’t agree that we’re in bubble territory

The AFR recently asked the chief economists of the big four Australian banks what they thought about Australian property, and if some of these claims that we were heading towards a bubble were true.

They said that we’re not in bubble territory.

Warren Hogan – ANZ

“Certainly no bubble.

The perceived expensiveness of our property market is as much as anything a social issue, affordability issues.

We simply don’t have the speculative credit element there to describe it as a bubble.

Low-income earners getting heavily leveraged was the problem in the United States we don’t have that issue here.”

 Michael  Blythe – CBA

No bubble.

Housing credit’s running at the bottom end of the range the last 30 years.

You need to see banks easing their lending standards as they chase more dubious borrowers that’s certainly not happening and you need a general expectation that house prices are going to keep rising forever. Now there is an element of that I think.

 Alan Oster – NAB:

No bubble.

If unemployment in our models gets to around 8 or 9 per cent then you get the same problem as you’ve got everywhere else but we’re undersupplied, interest rates are low, we think unemployment’s gone up but nowhere near 9 per cent, so no bubble.

 Bill Evans -Westpac

If you look at the growth in incomes over the last 15 years, it’s sort of kept pace with the growth in house prices.

I think you get bubbles when house prices run well ahead of income growth. We just haven’t seen that.

That’s what the experts say.

What do you think? Please leave your comments below.



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'There’s No Property Bubble | The 4 Big Bank Economists' have 1 comment

  1. Avatar for Property Update

    September 11, 2014 @ 3:20 pm Amayzingone

    I have never heard any bank admit to a housing bubble. I didn’t hear any American banks admit there was a housing bubble before the GFC until property prices in America crashed. It is not in the banks interest to admit to any housing bubble as that would signal a tightening is necessary in the RBA’s monetary policy to bring the bubble under control and then down go the bank’s profits! But when you get mortgage payments at up to 53% of incomes and investors buying property with no regard whatsoever to rental yields (as is the case in both Sydney and Melbourne) then you are starting to see both “pure speculation” in property and pressure on affordability. The recent drop in first home buyer numbers says it all. They are always first in and certainly always first out. So certainly not a nationwide bubble but for Sydney and Melbourne where some properties are selling within 24 hrs of being listed whilst most others are being sold at the first inspection, those are certainly indications of a property bubble to me and that is where the majority of Australia’s popular lives….ho hum!

    Reply


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