A major bank CEO has dismissed concerns over a housing bubble, claiming other factors will prevent the property market from overheating.
Philip Chronican, ANZ Australia CEO, has predicted that weak jobs growth and dampened consumer sentiment will put the brakes on rising home prices, Bloomberg has reported.
While Chronican predicted Australia would continue to suffer from supply constraints, forecasting the shortfall in dwellings to rise from the current 270,000 to 370,000 by 2015, he argued that recent strong growth in house prices was no indication of a bubble.
“The increase in prices recently has reignited speculation of a potential house price bubble. I do think this concern is overstated. At least part of the recent strength has simply been a rebound after a period of quite soft prices.”
The shortage in the supply of dwellings will continue to buoy Australian housing, Chronican said.
"What has protected Australia from a sharp downturn has been the absence of an excess supply and continued steady demand from a consistently growing population. No excess supply and no collapse in housing demand, therefore, no price collapse,” Chronican said.
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