Bubble Trouble Seen Brewing in Australia Home Prices | Katonah Real Estate
Gigi Wong beat four other bidders in an auction of a three-bedroom Sydney house with peeling wallpaper, cracked doors and an overgrown backyard by paying A$856,000 ($811,060), 14 percent more than the realtor expected the property to fetch.
"I’m not sure if I paid too much," said Wong, an accountant at the University of Sydney, after winning the bidding war for the investment property in an inner-west suburb where prices have tripled in the past 15 years. "Since I can, and have capacity to borrow money, I should utilize it."
Paul Bloxham, chief Australia economist at HSBC Holdings Plc in Sydney, talks about the nation's economy, central bank monetary policy and the local currency. The Reserve Bank of Australia left its benchmark interest rate unchanged at a record low as it weighs rising housing prices against renewed currency strength. Bloxham speaks with Angie Lau on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
A prospective buyer looks inside a house during an open inspection in the suburb of Dee Why in Sydney, Australia, on Oct. 19, 2013. Photographer: Brendon Thorne/Bloomberg
Australia, where housing accounts for about 60 percent of average household wealth compared with a global average of 45 percent, joins countries from Canada to Sweden to China seeing rapid price gains amid low borrowing costs that are sparking fears of a housing bubble. For now, constrained housing supply and demand from investors are driving prices higher, overpowering the downdraft from slower economic growth and a rising jobless rate.
"It’s easy to see how bubble-like conditions could emerge," said Saul Eslake, chief Australia economist at Bank of America Merrill Lynch in Melbourne. For now, while prices are climbing, the increase isn’t being accompanied by a rapid rise in borrowing or building, he said.
In Sydney, the nation’s most populous city, the average home price surged 13 percent in the 10 months to Oct. 31 to a record A$718,122 according to the RP Data-Rismark home value index. That compares with $806,000 in New York as of Sept. 30, according to the Real Estate Board of New York, and 331,338 pounds ($536,237) in London, according to the Nationwide Building Society.
http://www.bloomberg.com/news/2013-11-05/bubble-trouble-seen-brewing-in-australia-home-prices-mortgages.html
"I’m not sure if I paid too much," said Wong, an accountant at the University of Sydney, after winning the bidding war for the investment property in an inner-west suburb where prices have tripled in the past 15 years. "Since I can, and have capacity to borrow money, I should utilize it."
Paul Bloxham, chief Australia economist at HSBC Holdings Plc in Sydney, talks about the nation's economy, central bank monetary policy and the local currency. The Reserve Bank of Australia left its benchmark interest rate unchanged at a record low as it weighs rising housing prices against renewed currency strength. Bloxham speaks with Angie Lau on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
A prospective buyer looks inside a house during an open inspection in the suburb of Dee Why in Sydney, Australia, on Oct. 19, 2013. Photographer: Brendon Thorne/Bloomberg
Australia, where housing accounts for about 60 percent of average household wealth compared with a global average of 45 percent, joins countries from Canada to Sweden to China seeing rapid price gains amid low borrowing costs that are sparking fears of a housing bubble. For now, constrained housing supply and demand from investors are driving prices higher, overpowering the downdraft from slower economic growth and a rising jobless rate.
"It’s easy to see how bubble-like conditions could emerge," said Saul Eslake, chief Australia economist at Bank of America Merrill Lynch in Melbourne. For now, while prices are climbing, the increase isn’t being accompanied by a rapid rise in borrowing or building, he said.
In Sydney, the nation’s most populous city, the average home price surged 13 percent in the 10 months to Oct. 31 to a record A$718,122 according to the RP Data-Rismark home value index. That compares with $806,000 in New York as of Sept. 30, according to the Real Estate Board of New York, and 331,338 pounds ($536,237) in London, according to the Nationwide Building Society.
http://www.bloomberg.com/news/2013-11-05/bubble-trouble-seen-brewing-in-australia-home-prices-mortgages.html
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