There’s no property bubble – yet! [video]| ANZ Research

There’e no housing market bubble…well at least not yet, according to ANZ’s chief economist Warren Hogan.

In the following video Hogan gives an overview of the key concerns facing the Australian economy and looks at housing bubbles, the fall of the Australian dollar, interest rates and the China issue.

Hogan warns that we have the platform for a housing bubble to develop over the next few years, particularly if more people start purchasing speculative investment properties for short-term growth and explains that that a housing bubble must be characterised by a broad-based increase in leverage, rising prices and unsustainable speculative behaviour.

He explains:

“There’s certainly a risk that we’re moving into that [bubble] territory but where we sit now in late-2014 is not a housing bubble.

There are some excesses forming around the Sydney market that is a very historically high level of investor activity, but this is not a broad-based bubble.

Outside of Sydney and Melbourne house price gains are lethargic – we’re talking 3%, 4%, 5% for the other capital cities and the amount of leverage in the market outside of Sydney and Melbourne is quite modest.

The issue is that we have the platform to form a bubble in the next few years.

We’ve seen a significant increase in prices in Sydney, in Melbourne over a number of years and there is some momentum outside of those major cities and that means that expectations for capital appreciation are starting to form,

What we want to watch, and where we think it could become a real problem, is when we get a broader element of the community getting involved in investment property that is on a short-term speculative view. That’s where you get into problems.”

What others have to say:

Despite the property pessimists calling an impending crash since the market started turning in mid 2012, the market has defied these doomsayers.

Other property experts agree with Hogan and we’ve written about the many reasons why we’re not in a property bubble (yet) here:

1. Alan Kohler said: If everyone things it’s a property bubble – it isn’t 
2. Michael Matusik Burst the Property Bubble Myth
3. Ross Guest suggested someone should tell the IMF that there is no property bubble in Australia
4. In fact the economists of all 4 big banks agree there is no Australian property bubble