Australia's housing market may fall into a bubble crisis
[Guide] Affected by interest rates at historical lows and increased demand for investment and housing purchases, last year's Australian housing prices rose the most in four years. This has also raised concerns about the possibility of a bubble crisis in the Australian housing market and will endanger the already weak economic recovery.
According to the December 2013 report released by the Australian real estate information analysis agency RP Data, Australia's national housing prices surged by 12% last year, creating the largest increase since 9.8. Among the major cities, Sydney house prices rose the most, with a rise of 2009% last year. This also makes the median house price in Sydney approximately 14.5 Australian dollars (about 65 thousand US dollars).
At the same time, Melbourne house prices have increased by 8.5% annually. In addition, Perth and Brisbane house prices have risen by 9.9% and 5.1% respectively.
Commonwealth Bank of Australia senior economist Walkerman expects that Australian house prices are expected to continue to rise this year, which will also reduce the chance of the Bank of Australia cutting interest rates again. He said, "From a financial stability point of view, rising housing prices will be the focus of continued attention by the Reserve Bank of Australia in 2014."
But Burdick, the head of the real estate research department of Aussen Bank, has a different opinion. He believes that it is too early to discuss the housing bubble. He pointed out that this wave of house price increases is mainly supported by fundamentals, such as the increase in people's purchasing power, the release of potential sales, and the supplementary increase in house prices.
On the same day that the housing price report was released, the Australian Industry Group (AIG) and PricewaterhouseCoopers (PWC) jointly released the December manufacturing index, which dropped to 12 points, the second consecutive month of decline.
The divergence between the soaring housing prices in Australia and the weak manufacturing sector also highlights the major challenges faced by Australian policy officials. They must create a new engine for economic growth as the mining investment boom cools down.
The Bank of Australia has cut interest rates 8 times in the past two years, lowering the benchmark interest rate to 2.5%, hoping to stimulate growth in other areas. But so far, sectors such as manufacturing, retail and tourism have still been slow to respond to the reduction in borrowing costs, and consumer spending has not increased as expected.
Australia, which is rich in natural resources, has set a growth miracle for 22 consecutive years, and now its economic momentum is rapidly weakening. Its gross domestic production in the third quarter of last year only increased by 3% over the same period last year, which was significantly lower than the long-term average economic growth rate of 2.3%.
Source: The Australian Times