Joe Hockey denies Australian property bubble, says rising prices just a reaction to lack of supply
Joe Hockey denies Australian property bubble, says rising prices just a reaction to lack of supply; RBA needs to address Australia's property bubble: UBS
Federal Treasurer Joe Hockey has again dismissed the idea that a property bubble is forming in Australia, saying that rising prices were just a reaction to lack of supply.
Echoing the thoughts of many private sector economists and bankers in the country, Mr Hockey said the idea that households and investors were taking on too much debt to buy houses was wrong.
"I'm not so sure it's credit fuelled," he said during a seminar in Sydney. "There's a lot of cash going into property now."
He said the recent surge in new dwelling construction – much of it the result of foreign investment - in Sydney, Melbourne and Brisbane might go some way to addressing housing shortages in the country.
"Australia fundamentally doesn't produce enough houses to meet demand," the Treasurer said.
"It is just an infinite mantra for international commentators, for analysts based overseas to say 'well, you know, there's a bit of a housing bubble emerging in Australia'.
"That is rather a lazy analysis, because fundamentally we don't have enough supply to meet demand.
"That doesn't suggest there's a bubble; there might be a price increase of some substance, but you'd expect the market to react and produce some more housing."
UBS global chief economist Larry Hatheway has warned that unless the Australian dollar falls below US85c in the near future, the Reserve Bank may have little choice but to use other tools besides changing rates to ward off bubble-like conditions in the property market.
Speaking as he was wrapping up a tour of Australia, Mr Hatheway observed that just as Australia was beginning to wean itself off its dependence in the mining goods sector, it must now rebalance its economy towards consumption, as well as investment in other areas of exports.
"That's going to require, in my view, a weaker exchange rate. Getting from here to there though will be difficult. The Reserve Bank could facilitate that but cutting interest rates might exacerbate some of the bubbly-like conditions in the Australian housing market."
The Australian dollar dipped below US90c on Monday for the first time since early March, before bouncing back.
The move has raised hopes of further relief being provided to struggling sectors hurt by the high dollar and is likely to take some of the pressure off the RBA to cut rates further to help lower the currency and achieve a greater balance in economic growth.
Mr Hatheway added that macro prudential tools, which may include the setting of limits on loans that banks can issue with small deposits as used by New Zealand's central bank, should be considered by the RBA.
"The Reserve Bank has never really been a big fan of macro prudential tools, however if they're unable to see some depreciation of the currency, which is necessary for the rebalancing of the Australian dollar, and also continue to see house prices moving higher, they may have little choice but to reconsider."
The housing and construction markets have been among the main beneficiaries of the RBA's historically low cash rate at 2.5 per cent with house prices surging higher in many populated areas.
Still many academics, including some linked to the International Monetary Fund have questioned the effectiveness of using macro-prudential tools to ease the house price pressures and prevent a market crash.
"That is rather a lazy analysis, because fundamentally we don't have enough supply to meet demand.
What we need in this country is more house geologists so we can find new house deposits.
Yer cant mine any more houses until ya find new deposits of houses, then you gots to get the engineers in, coz mining houses is tricky, if yer not careful they break up.
Been too much focus on diggin out iron ore for the chinese and as a result we are just not mining enough houses to supply the local market.
Former federal treasurer Peter Costello has backed Treasurer Joe Hockey’s assertion there is no housing bubble in Australia, as supply is not meeting demand.
“For a western developed country, Australia’s population growth is very strong,” Mr Costello said.
“So we have to factor that housing supply is not meeting demand. It’s important the public understands this”
“If you speak to anyone outside Australia as I do, they will ask if the Australian residential property market is overvalued… It is the first thing any economic investor will ask”.
“They say that using multiples against world standards… But we are growing so fast, faster than the Mexicans, Argentinians, South Africans”
“Building a house is comparatively cheap… What is expensive in Australia is land. We have increasing demand but quite a restrictive supply of land and as a result, prices are high”.
“Houses are so expensive because the government has the control on land.”
The Reserve Bank of Australia’s warning of a housing bubble doesn’t apply to South East Queensland, according to leading house and land developer Ausbuild.
The Reserve Bank's meeting minutes revealed some concern around house prices and said that they were putting them under “close observation”, but Ausbuild's joint managing director Matt Bell said that South East Queensland’s situation is not a replica of Melbourne and Sydney.
“The housing construction sector is moving at a steady, sustainable pace, with land being released at a rate that is meeting demand in a responsible way,” Bell said.
“Prices are still competitive, and will continue to be so, given the steady and continuous rate of supply by developers in the market.”
The last thing Queensland needs, said Bell, is buyers getting the jitters when they’re just getting confidence to enter the marketplace post-GFC.
“Confidence is everything when people are looking to make what is the most significant purchase of their lifetime,” he said.
It appears observer Terry Ryder agrees with the comments that there isn't a bubble, particularly when you take Sydney out of the equation.
"The statistics suggest that all [the markets] are up by 10%, when in fact if you take Sydney out of the equation it's clear that this isn't the case," Ryder said. He notes that Sydney is playing catch up after many years of stagnancy.
While Ryder says that South East Queensland isn't "immune" to the effects of the market, at present it represents some of the strongest growth opportunities in the country with more growth markets in the area than in any other location in Australia.
He doesn't necessarily recommend the Gold Coast, but says that South East Queensland as a whole includes some of the more dynamic markets in the country.
Buyer's agent Todd Hunter, from Sydney-based wHeregroup, noted that there are many markets within South East Queensland, including areas where houses are undervalued at sub-$400,000.
He said that prices are starting to head northbound, and while Sydney and Melbourne have been booming for two years, South East Queensland is only just starting to heat up.
When Joe says we dont have a bubble and the market is at play, he should also state his blatant conflict of interest!!
"Oh by the way...I own 5 properties."
Not to mention the Canberra house 95% owned by his wife (how many properties does she have?) that he gets $270 a night allowance for when he's in Canberra. They also rent out the rooms (and shed) to other pollies. Perhaps crazy Dave is actually Brendan Nelson. It's quite a nice shed mind you.
When Joe says we dont have a bubble and the market is at play, he should also state his blatant conflict of interest!!
"Oh by the way...I own 5 properties."
Whenever a treasurer of any country opens their mouth, you can usually be assured of one thing, that's its just another load of shit dribble and lies.
Just like the last treasurer, promising how we will have a budget surplus in 2012, and that our was strong and robust and mining is strong. But let's look at the facts. There was no budget surplus in 2012 or anytime after, not even close. Was this dope just completely stupid or just completely full of shit when he came out with this. Its shows either we have complete dopes running the show or liars, its only one or the other, you decide. So when Joe comes out with no housing bubble, again you can be assured its just more complete lies and bullshit.
Australian housing is one of the biggest bubbles of anykind in world history .
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy