Australian housing prices have risen faster and for longer than international norms, sparking fears of an Australian house price bubble that could lead to serious banking meltdowns.
A new report from Moody’s economic research arm, Moody’s Analytics, suggests that Australian house prices have been driven up by local tax rules, poor transport infrastructure and city planning.
Moody’s Analytics economists say Australian housing is “modestly, but not excessively overvalued relative to fundamentals”, and that banks’ continued real estate lending growth has “raised some eyebrows”.
New home lending grew 0.6% in May, according to last Friday’s ABS Housing Finance figures, pushing the number of loans for the construction and purchase of new owner-occupied homes 18.1% higher than last year.
Australian banks have the highest exposure to residential mortgages in the world, Moody’s Analytics notes.
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