The issue of Australian property market having a bubble that's about to burst has been widely written and talked about. But amid the thousands of articles tackling this issue, recent reports based on expert opinions say that the property bubble talks is overblown.
Most recently, a report from Jonathan Tepper, an English economist, created a buzz online. He predicted that the Australia's property market is poised for a collapse and house values will decline to a whopping 50 percent. According to Tepper, the country will experience what happened in other countries such as the United States and Spain where property prices declined due to high debt to income ratios and overvalued properties.
But this property bubble, according to Commonwealth Bank of Australia chief economist, Michael Blythe, is overblown. As per The Sydney Morning Herald report, Blythe explained to clients why it is important to measure like-for-like data rather than the differences of various price increases in a cycle because it gives a better understanding of what the trend is.
Blythe further explained that because the bigger part of the population are located in larger cities, they are more likely to experience housing booms. In addition, people's income are also higher in the cities and so valuations are also higher. Thus, when compared with country-wide data, it would show higher prices.
"Price:income ratios are still historically high," Blythe added. "Our consistent view over the years has been that the rise reflects a shift in household preference for and ability to access credit. And a shift in the type of housing we want to inhabit."
In an earlier report here on Realty Today, it has been observed that there is a slowdown in spending habits on household goods such as furnishings, appliances and hardware. With this trend, the country's real estate market might expect to weaken.