Property market is a risk to the economy says OECD
The booming Australian property market is a risk to the economy and steps should be taken to curb them. That’s the view of the Organisation for Economic Co-operation and Development which has published a report on the Aussie economy. Comparing the market here with that of countries including Canada, the US and some of the European nations, the report notes that house prices here have increased 225 per cent since 1995. In Canada growth has been 180 per cent and in the US and Europe it is 125 per cent. In the last year alone the average Australian home has increased in price by 10 per cent. The OECD suggests that the Reserve Bank of Australia may have to tighten lending regulations in a bid to cool the market. It also suggested that negative gearing could be made less attractive.
What do the bank bosses think will happen in 2015?
Despite many reports about the high house prices and out-of-control household debt, the people who are in charge of our biggest banks do not consider things to be at breaking point, or even of major concern. The Sydney Morning Herald asked the bosses of banks including ANZ, NAB, CBA and St George’s Bank if they believed that house prices were too high. Most felt that while prices are high the issue has been lack of supply and infrastructure in outlying areas. It is also pointed out that the most quoted prices are those in the capital cities and outlying areas have seen more modest pricing. The bankers consider the levels of household debt to be manageable and some pointed to the higher levels of savings that many Australians now have and the speed at which many are able to repay debts. On interest rates they believe that there will not be any significant increases in 2015, if at all. Some suggest that 2016 will be the time for changes while there is talk of rate cuts too in the next 12 months if action is needed on the value of the dollar.
NSW government should buy back Mr Fluffy homes says report
A parliamentary report says that the New South Wales government should follow the lead of the ACT and buy back the homes built by Mr Fluffy using loose-fill asbestos. The total number of homes could be as high as 5300 and would cost the government $5 billion but that would be balanced against the risk to those living in the homes and potentially the wider public. The report said that owners should be legally required to disclose that their home is a Mr Fluffy-built property to potential buyers and even suggests that homes should be tagged to inform visitors of the risk. The free testing of homes deemed to be a risk is currently at the owners’ request but should be mandatory the report says.