Economists have expressed fear in rising house prices over Australia with the current low interest rates, high unemployment and inflation reports. Michael Matusik describes this as an overheated market that will eventually recover in 2015. He states that this cyclical behavior must be understood to avoid any negative impact to the economy.
As of this time, property prices are indeed high, but this is not true for all states and territories. The prices are above normal levels, but not out of reach. In fact, arrears in Australia are relatively low.
He points out that gains this year and in 2015 will all be for naught if prices shoot up too fast. The current price forecasts an increase of 15% – 20% for this year. The high unemployment and inflation, interest rates need to fall further to promote lower home values. Lenders are also encouraged to promote strict lending measures so as not to overheat the property market further.
Read more about this on the Property Observer website.