We know that the Reserve Bank and APRA have been concerned by property price rises Sydney and Melbourne over the past 12 months but Australia’s Treasury Secretary John Fraser didn’t mince words this morning when he appeared before the Senate estimates committee.
Fraser said that Sydney property was “unequivocally” in bubble territory.
“When you look at the housing price bubble evidence, it’s unequivocally the case in Sydney. Unequivocally,” Fraser told the committee.
Like the RBA, Fraser is worried that “very low historical interest rates are encouraging people to perhaps over-invest in housing.” Fraser said he was basing his view on a bubble on both the data and his own observations and highlighted that the “higher end” of Melbourne was also in a bubble.
But the data certainly supports his conjecture with showing that even though overall house prices fell 0.9% in May overall house prices in Sydney are up 39.3% since they bottomed in 2012. Overall capital city values are lagging Sydney but have recorded a still healthy 24.2% increase during the same period.
Fraser’s comments and the blunt nature of them are a clear sign of the growing disquiet amongst Australia’s policy makers.