The oft-mentioned Australian housing bubble may finally be real to the country’s government, according to the Australian.
E-mails obtained by the paper suggest that officials inside the Treasury are locked in a debate about a potential bubble.
Specifically, Steve Morling, who is general manager of the domestic economy division, wrote (emphasis ours):
The elephant in the room is house prices or more specifically the risk of a precipitous drop in them, perhaps from an external shock or perhaps from their own internal dynamics when affordability constraints or capacity debt levels see prices and expectations of house prices start to move in the opposite direction.
Sounds like a housing bubble just waiting to be pricked to us.
This falls in line with other estimates on the Australian real estate market, including those made by The Economist.
If China’s tightening goes too far (or just far enough), demand for Australia’s mining products could dry up, creating a spike in unemployment in the country. Such a spike might be the trigger for a housing market collapse.
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