Concerns Over Property Bubble in Australia

Prices in the one of the world’s most expensive housing markets are set to pick up pace this year, triggering renewed warnings of a potential bubble brewing.

According to a note from HSBC this week, while growth in real estate prices showed some signs of cooling in May, a strong bounce back in house price data and auction clearance rates in June and July could mean prices will end the year 10 percent higher.

“While we remain of the view that Australia does not currently have a housing bubble, it seems likely that if the current housing market trends were to persist for too long, there would be a risk of inflating one… the longer mortgage rates remain at low levels, the more this risk grows,” said Paul Bloxham, chief economist for Australia and New Zealand at HSBC.


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