Concerns that Australia is facing a housing bubble are based on “superficial or incomplete analysis”, according to the CBA.
Bloomberg reports that the lender is preparing slides for upcoming meetings with overseas investors that indicate Australia’s market is every bit as affordable as comparable countries.
“Taking into account geographic differences, the ratio of house price to income in Australia is not that much different to most other comparable countries,” the bank said. “Population growth and excess demand relative to supply has been a key driver of Australian house price appreciation -- these factors are unlikely to reverse in the near term.”
The CBA cited the “strong fundamentals” of the Australian economy, an undersupply of housing and population growth of about 2% a year as preventing against a sudden collapse.
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