According to George Livermore, group executive of Core Logic, Australia is not facing a house price bubble, rather a severe housing affordability crisis.
George Livermore said that the US property market faced a burst bubble during the GFC when mortgage holders preferred to default on their home loans because of the dip in unemployment and the non-recourse mortgage trend.
“Some markets, like in Arizona, Florida and California, suffered a big price drop because underlying demand was never really there, so prices fell to where the underlying demand was,” he said.
US had gone through a decade of overbuilding, over four million too many houses and unfortunately it’s going to take some time to correctly match up demand with supply.
Unlike the US market, Mr Livermore said Australia’s issue was more about average Australians being unable to buy into the property market because of a lack of supply.
“Affordability is not the same issue as a housing bubble,” he said.
“I hear talk about a housing bubble but I don’t think Australia is facing one.
“The Australian government needs to address the issue of affordability through further supply,” he said
If the supply issue is addressed then the current price pressure on housing will be alleviated.
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