Australia’s property market is approaching the bubble extremes seen a decade ago, an analyst told CNBC, after the Reserve Bank of Australia (RBA) warned this week that the market looks ‘unbalanced’.
“There was an intense bubble in the property market a decade ago. There were property ‘spruikers’ out there encouraging people to buy five properties at a time – everyone was buying property magazines and all the top rated shows on TV were property related,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, told CNBC.
“We haven’t quite returned to the extremes we had back then but we’re getting close and that’s why the RBA is getting concerned,” he said. “Danger signs are emerging.” A low interest rate environment and strong price competition among lenders have led to a surge in investment property, raising the risk of a repricing, the RBA said in its Financial Stability Review on Wednesday.