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The bear case: *PROPERTY prices have softened in the US and Europe so they are likely to here. *AUSTRALIA has just been judged to have some of the least affordable housing in the world by the Demographia International Housing Affordability Survey. *HOUSING loans are getting tougher to get as the more conservative major banks take back market share from the non-bank lenders. *RISING interest rates will further deter buyers, who will want lower prices to get them over the line. *RISING rates could also force foreclosures or sales by some home owners on the edge. *CAPITAL city house prices have been rising relative to average earnings. *HOUSING debt as a percentage of disposable income has also been rising for many years. *THE Economist has long been warning that Australian house prices are in a bubble and need to fall by 20 to 30 per cent before rental earning ratios make sense. The bull case: *UNLIKE the US in particular, there is no evidence of a housing oversupply in Australia - if anything, there is a shortage. *THERE is also no widespread equivalent to the sub-prime mortgage crisis in Australia. *RENTS are rising, lending support to the investor side of the market. *IMMIGRATION and falling household sizes have added to fundamental housing demand. *INCOMES have been rising strongly for several years, allowing borrowers to easily cope with increased repayments. *TRADITIONALLY, a weak market causes money to flow into property as investors seek the perceived stability of bricks and mortar. |
