Australian Property News

Bank moves to dispel housing bubble fears

Posted on Tuesday, September 14 2010 at 9:41 AM

Concerns that Australia is facing a housing bubble are often based on superficial or incomplete research on the domestic market, according to the Commonwealth Bank.

In a presentation lodged with the Australian Stock Exchange the bank reportedly said: “The strong fundamentals of the Australian economy provide a firm underpinning to the housing market, reducing the risk of a sudden and dramatic collapse in house prices”.

Some experts have warned that there is a housing bubble in Australia and ‘price corrections’ are inevitable, especially in the light of dwindling housing affordability.

“Given that house price growth has outstripped wage growth significantly over the past decades, this would have to entail either a significant fall in property prices or a sustained period of stagnant property prices,” says global consultants Datamonitor.

Commonwealth Bank executives have said they will travel overseas to meet investors and try to dispel growing fears of a housing bubble in Australia.

Bank analysts have outlined several observations on the health of the local economy and factors that they say differentiate the market from those overseas.

For instance, Australia has one of the lowest unemployment rates among developed economies and strong migration levels, which continues to underpin demand.