Brighter And some

Are we in for bubble trouble?

by Kate Watt, Marketing Manager 15 July 2021

It’s the question crystal ball gazers attempt to answer whenever property prices boom: are we in a bubble?

When homes become unaffordable for buyers, prices must come down. Right? Not necessarily.

Some experts are predicting a bubble without the crash.

“Property prices in Sydney, Melbourne, Brisbane, Adelaide and Canberra have outstripped the growth expected from fundamental factors, such as rents, interest rates, income, and housing supply, and are being bolstered by panic buying and speculation,” Domain reports, based on new modelling from Macquarie University and Yale University.

But Professor Shuping Shi from Macquarie Business School says she does not expect prices to drop dramatically. They’re more likely to level off or fall only slightly in the future.

HSBC Australia chief economist Paul Bloxham shared the sentiment that some heat would come out of the market.

“We expect that the housing market is going to cool over the coming quarters and running into 2022,” he said.

Meanwhile, prudent lending standards and the prospect of no further interest rate cuts, will act to cool the market, while increasing investor activity will be worth watching to see if it pumps more heat into the market.

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