Luci Ellis, Head of Financial Stability Department for the Reserve Bank of Australia today said “Recent data suggest that we do not have a credit-fuelled speculative boom on our hands” after data from the Australian Bureau of Statistics out earlier this month showed house prices surged 20 percent across the nation, and as high as 27.7 percent in Melbourne this year.
In fear of the current situation turning into a bubble, Ms Ellis said “It will therefore be important for lenders to remain prudent in their standards.” She indicated demand side drivers were low interest rates and lower than expected unemployment.
Ms Ellis comments follow that of U.S. Federal Reserve Chairman Ben Bernanke. In October 2005, Bernanke told congress he didn’t believe there was a housing bubble in the U.S. after prices rose almost 25% in two years citing “largely reflect strong economic fundamentals,” such as strong growth in jobs and incomes. Early the next year, house prices took a sharp dive in the U.S.
» No property bubble, RBA says – The Sydney Morning Herald -18th May 2010.
» Bernanke: There’s No Housing Bubble to Go Bust – The Washington Post, 27th October 2005.