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Will the Bubble Burst?
An article from David James in the BRW discusses the bursting of the Australian residential property bubble. I have been discussing the “expensive” valuations of our property for sometime however the market is holding up, so far.
In the article Tim Lawless, research Director of RP Data, says that in the year to the end of April, the top one-fifth most expensive capital city suburbs recorded a decline of 5.4%.
Naturally, the parallel is then drawing to the US residential property market which is roughly 1/3 below the peak in 2006.
It should be noted that the mortgage debt to GDP ratio in Australia is around 87% according to The Reserve Bank of Australia. James cites the US peaked at about 75% saying that our bubble is bigger than the US.
I guess we still have strong employment in our economy and the question is what would happen should the “lucky” country become subject to a global slowdown lead by China thus decreasing the global demand for our resources?
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