SQM: No housing bubble

Well, the Reserve Bank surprised markets today by holding interest rates steady. Moreover, it made clear in a statement that while Sydney’s market may be hot, property elsewhere isn’t so hot, with more varied performances in other cities in recent times.

We think today’s statement will put to rest talk of a national housing bubble. The RBA doesn’t appear to be too concerned about national house prices and it is looking at the market on a national basis. While house prices may be overvalued nationally to some degree, we aren’t seeing the sort of valuations that we saw back in 2003 that were way more inflated relative to incomes and GDP.