(Aust Financial Review 25th May 2011)
Australia’s housing market looks very expensive with prices running at around 25% higher than the long-term average. Further gains will be limited by the high debt levels borrowers have taken on to buy property.
It means they are vulnerable if anything goes wrong. With this in mind the veiled threats by the Reserve Bank of Australia to raise interest rates must send a shudder through some investors.
A recent run of soft consumer data shows that confidence levels are already low in most households, so any move by the RBA will hit hard. According to AMP Capital Investors, so far this year prices are down 2%.