According to Louis Christopher of SQM Research, on record the Australian housing market has hit its second most overvalued point, potentially drawing closer towards “a dangerous national housing bubble”.
He has stated that “the national property market was overvalued by 22 per cent, which was only lower than 2003 when it hit 25 per cent” and was driven specifically by Sydney and Melbourne, both capital cities having already entered that bubble.
Christopher has announced that “The current tempo has picked up particularly in Sydney. Melbourne has had about 15 per cent per annum price gains, I know that is a little bit higher at what the official numbers suggest but it is our view that, that is what the market has done. And our expectation is that the current trends will continue well into next year.’’
Melbourne had hit its highest overvaluation level of 40 per cent and Sydney was at its second highest level of overvaluation at 40 per cent as well.
Mr Christopher also warned in his latest report that “if the Reserve Bank of Australia didn’t lift interest rates or encourage the Australian Prudential Regulation Authority to clamp down on home lending, the national market could enter bubble territory.”
Hobart values would increase between 7 per cent and 12 per cent, Brisbane between 3 per cent and 7 per cent, Adelaide between 2 per cent and 4 per cent, and Canberra between 3 per cent and 7 per cent.
Fortunately, the report has predicted values in Perth would drop between 8 per cent and 4 per cent and drop in Darwin between 9 per cent and 5 per cent.
This news article was completely sourced by News.com.au