Concerns that rising property prices will prompt a property bubble are “overstated,” says Philip Chronican, local CEO for Australian and New Zealand Banking Group (ANZ).
The jump in house prices observed in the last couple of months has reignited fears of a potential house price bubble, but the truth is that it is just a rebound after a period of falling prices, according to Chronican.
In a speech delivered last week, Chronican said that house prices are expected to see a 5% increase in the next 12 months. Meanwhile, there is a shortage of around 270,000 residential properties, equalling 20 months of construction. Given the strong population growth, and slow construction activity, the figure is likely to increase to 370,000 by 2015, he said.
Recent Data from the RP Data Rismark Home Value Index shows that house values in the country’s largest cities saw a 5.1% rise in the first eight months of 2013. In the six months leading up to August, prices recorded their fastest growth rate for the last three years. In light of this, the Reserve Bank of Australia recently advised banks in the country to keep their lending operations at a reasonable level amid the expanding housing market activity, Bloomberg reports.