Perth price rise proceeds with June value bump
Homes in Perth have continued their strong year of growth, with values rising throughout June. ...
Speculation about a housing ‘bubble’ in Australia doesn’t align with overall consumer demand for housing finance, according to a leading mortgage industry source.
1300HomeLoan managing director John Kolenda said commentary from some quarters suggesting economic conditions in Australia are similar to a pre-global financial crisis (GFC) United States are way off the mark.
Mr Kolenda said that even with the decisive federal election result, Australia still has a long way to go before highly favourable economic conditions and pre-GFC consumer confidence return.
“From what we see, a recent surge in real estate activity in Sydney is mainly from higher end foreign investors and this sort of interest is not being repeated in most parts of Australia,” he said.
Mr Kolenda said while Australian Bureau of Statistics (ABS) housing finance figures had risen each month for the past seven months, this was largely due to an increase in demand from investors and refinancing with lowering interest rates.
“Activity from first home buyers remains subdued despite interest rates being at record lows and it is widely acknowledged that we haven’t seen any kind of blow out in borrowing,” Mr Kolenda said.
“In fact, Australians are continuing to pay down debt and increase savings. In my view, [the Australian Prudential Regulation Authority's] comments urging banks and non-bank lenders to continue to lend responsibly are fair, but they are hardly a warning of a coming financial meltdown and housing bubble.
“It doesn’t help confidence when some commentators and sections of the media keep talking up property prices. Australia is expensive compared to most parts of the world but the reality is that prices have largely fallen in recent years.”
Mr Kolenda said the Reserve Bank of Australia's (RBA's) reducing the official cash rate to an all-time low of 2.5 per cent in response to sagging consumer confidence and the high Australian dollar had helped maintain activity in the property and home finance markets
“It could be disastrous to see the RBA react in the near future to headline grabbing speculation about property bubbles by applying an interest rate handbrake,” he said.