In the latest Oliver’s Insights, Dr Shane Oliver looks at the outlook for Australian house prices and specifically the much talked about risk of a property crash.
The key points are as follows:
- Talk of a property crash is likely to ramp up again with signs that the Sydney and Melbourne property markets are cooling. But the Australian property market is a lot more complicated than the crash calls suggest.
- We continue to expect a 5-10% downswing at Sydney and Melbourne property prices but a crash is unlikely and other capital cities will perform better.
- It remains a time for property investors to exercise caution and focus on laggard or higher-yielding cities or regions.
A common narrative on the Australian housing market is that it’s in a giant speculative bubble propelled by tax breaks, low-interest rates and “liar loans” that have led to massive mortgage stress and that it’s all about to go bust, bringing down the banks and the economy with it.
The trouble is we have been hearing the same for years. Calls for a property crash have been pumped out repeatedly since early last decade.