From Bloomie today:
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.
…Rising sales to investors puts the housing market in a more precarious position if economic conditions unexpectedly sour, Eslake said.
“Investors aren’t as committed to their properties as owner-occupiers,” he said by telephone. Changes in the outlook for home prices, rising interest rates or unfavorable changes in regulation could lead them to “dump their properties, putting sharp downward pressure on prices,” he said.
Yep.
