AUSTRALIA is in the midst of the “largest housing bubble on record” and when it bursts it will be a “bloodbath”.
This is the assessment of two housing economists who claim Australia is on track for a US and Irish-style collapse because of an oversupply of housing in the country.
In a frank and scathing submission to the upcoming parliamentary inquiry into home ownership which will begin this Friday, Lindsay David and Philip Soos criticise politicians and the housing industry for perpetuating the myth of housing shortages in major capital cities.
They claim there is actually an oversupply of housing, especially in Victoria.
Earlier this month, Treasurer Joe Hockey sparked debate when he denied the existence of a housing bubble, then told those struggling with housing affordability in Sydney to “get a good job that pays good money”.
Mr David and Mr Soos of LF Economics, which made the submission, also take aim at the banking sector and our taxation system, which they say has added to the problem.
They predict the “epicentre” of the collapse will take place in Melbourne where, they say, rents have not increased substantially for the past five years.
They also claim the failure of house prices to increase substantially in WA in recent years will trigger a similar collapse in Perth.
“Melbourne is primed to become the epicentre of a legendary housing market crash due to the combination of a staggering boom in real housing prices (178 per cent),” the submission says. “Perth is also in a serious predicament following price stagnation and substantial net income losses since the market peaked in (the first quarter of 2007). On average, investors purchasing after the peak have lost in terms of both prices and rental income.
“Other capital cities will experience a downturn, though not as large in percentage terms as Melbourne or Perth.”
source:news.com
STUDIO 3 NEWCASTLE AUSTRALIA 