European and American housing market remains depressed in the context of the Australian housing prices remain relatively high. With the recent Australian central bank tightening, some market institutions are expected, the local real estate market in several years of bull market after the bubble burst there may be risks. In this regard, the Australian government and the central bank has been denied in unison.
Australian Government s analysis of market trends is not monolithic, two Treasury officials earlier this year, even on the bubble issues debate. In the Australian dollar, long and short sides contest the occasion, the news sparked further speculation on the price trend.
Elephant in the room
Australian Treasury officials in macro financial sector earlier this year Feier Jia Dayton circulated in an internal document described the level of household debt problems of the housing market, the result was the Ministry of Finance officials of the domestic economy questioned. Maureen believes that judged the housing market, should not be evasive, but should pay more attention to the risk of sudden drop in housing prices.
Maureen risk to the market as a elephant in the room that may be attracted to the economy in big trouble. He said that the level of housing prices in Australia in 2000 after three to four years rose by 50 to 60 , while the market fundamentals are basically unchanged, this can not but alert.
He said the risk of bubble may come from external shocks may also come from families ability to pay, debt levels and changes in market expectations. Once the reversal of these factors most likely lead to unrest.
Bullish for how long
Garton believes that the housing market in 2000 after several years of the bull market reflects the improving fundamentals. For Maureen s bubble says, he retorted, Australian housing market bubbles can not be sustained for many years without breaking, so the market does not exist in a bubble.
In this regard, Maureen, said the length of time as a measure of whether the market can not be a bubble standards. He pointed out that people love to use the fundamentals to explain the price rise, which there is a bubble in a long time an important factor. For example, the UK real estate bubble continued for about 10 years, during the so called fundamentals are solid arguments continue to push up prices until the bubble burst.
Maureen s concern is not entirely alarmist. Past three years, the average price of housing in Australia rose by 20 . The latest Australian Bureau of Statistics data show that the credit tightening, Australian dollar and other factors, in the third quarter, the Australian national average price of housing rose only 0.1 year on year, in addition to Melbourne, Perth and Darwin house prices in major cities outside decreased.
Some analysts have speculated that this may mean that after years of bull market has ushered in the Australian housing market turning point. However, many analysts believe that the strong momentum of growth in the Australian economy against the backdrop of the housing market collapse is unlikely to happen.
Inhibition of heat is the key
Asset prices continue to rise, there is the risk of inflation is too high. Therefore, to prevent overheating of the economy, control inflation and asset bubbles naturally become the reasonable policy options.
Currently, the Australian unemployment rate remained at 5 , far better than the developed economies in Europe and America the employment situation. Organization for Economic Cooperation and Development released a report expected 18, the next two years, Australian economic growth will remain at 3.5 to 4 is relatively high, which will help to further reduce unemployment.
In addition, the OECD suggested that if the Australian Government to increase housing supply in the future more efforts, you will not only help curb housing prices, break the bottleneck of economic development will also help to promote relevant economic sector.
In addition, despite the Reserve Bank of Australia earlier this month raised its benchmark interest rate has been 4.75 , a level still well below the March 2008 7.5 of the time. Should be said that the Australian monetary authorities have adequate room for policy action.
It is anticipated that the unemployment rate controlled, economic growth is expected optimistic case, the period ahead will continue to tighten monetary policy in Australia, focusing on guard against market risks, and strive to achieve low inflation and economic growth. Affected by the Australian housing market may have ushered in an adjustment to bring prices more reasonable.
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