Strong growth trends pour water on bubble talk

Strong growth trends pour water on bubble talk

15 Jul 2015 By: Greg Hocking 0 Comment

If you own a home you will know about ‘the bubble’. This year there have been headlines warning of imminent price crashes, and various economists’ alarm bells ringing.

So is it true? Is ‘the bubble’ about to burst?

I don’t have a crystal ball but after more than 30 years’ in this market I know it follows a cycle and home prices always orbit upwards. Some will feel overwhelmed by the sensational stories. That’s understandable.

So here are a couple of industry facts:

First, housing prices will only ever reflect buyer demand and housing supply. Too much supply and not enough demand; prices fall. More demand than listings and prices rise.

Based on latest data from the ABS, there is no sign of Victoria’s population shrinking. In fact the number of new residents our state welcomes annually from interstate and overseas is growing and as these new residents must live somewhere, demand for quality housing near Melbourne’s wealth of amenities will continue to remain strong.

Second, according to the Reserve Bank’s senior research manager Peter Tulip, Australian home prices are about 30 per cent undervalued compared to the cost of renting a comparable home.

In a recent Fairfax Media report, Dr Tulip was quoted citing new research that shows 2015’s price expectations are not “unusual” or “irrational”. Pours water on the bubble, doesn’t it?

If you want to know more about your home’s real worth, call us for an obligation-free valuation.

GH headshot blue tie high res2

Greg Hocking

Leave a comment