The Reserve Bank of Australia (RBA) recently outlined future challenges during their six-monthly check-up on the financial system. According to RBA, although the recent growth in the market has helped many banks and households, risks of housing prices dropping still exist.
Contrary to this, RBA predicts that housing prices could potentially rise sharply in the future.
With the recent decrease in housing demands and stricter loan approvals, not many future building constructions have been approved. As population continues to grow, a growth in population would mean more housing demands. Increase in future housing demands and lack of future building constructions can cause housing shortages. This shortage is predicted to cause housing prices to sharply increase. The rapid growth in housing prices could also potentially stimulate a stronger debt growth (for example, household debts and mortgage arrears).
Overall, it’s not an ideal situation. Although nothing is certain now, it won’t help to have some caution towards the property market and its prices.
See the full article here.