A new report by the Australian Bankers’ Association (ABA) may hush concerns of a property market bust, claiming that the price hikes are not unusual and borrowers could manage increasing rates.
The report titled “Key Truths on Housing in Australia” also stated there is “insufficient evidence” of a speculative bubble. It assessed the market for the past 25 years.
“House prices in Australia are currently in a period of strong growth. (But) there is insufficient evidence to conclude that house prices are unsustainably overvalued or that Australia is currently experiencing a speculative ‘bubble’,” the report says, as quoted in The Australian.
ABA found that the biggest driver of prices is mortgage rates dropping below 5%.
The study also supported a Reserve Bank of Australia report this week that showed the highest debts are held by wealthy, less risky borrowers.
However, ABA admits in its paper that houses are expensive relative to rents and “current rates of return may be economically viable only if expectations of further price gains are fulfilled”.
“The recent rise of house prices in Australia is not unusual when compared with historical trends, and the current house price growth has not exceeded the peak rates we saw before the global financial crisis,” said Steven Munchenberg, chief executive of the ABA. 

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