A great deal of debate has occurred in Australia on the notion that the residential property market may be experiencing a bubble, set to burst in a similar fashion to that in the United States. Over the last decade and a half, housing prices have risen substantially since 1996. The lack of affordable accommodation within the capital cities where most Australians live has resulted in concern about the viability of purchasing a home, especially for first home buyers. Rising housing costs have placed many Australians under a heavy financial burden, primarily that of paying down the mortgage on owner-occupied properties.
Despite the misgivings of the public, the economic and financial authorities – the Reserve Bank of Australia, the Treasury, the major commercial banks and real estate industry – have provided assurance that a bubble does not exist and the “doom and gloom” scenarios of a downturn in prices is implausible, the result of fear-mongering. On the other hand, a number of Australian and US economists have offered analyses countering the mainstream account. Some of them accurately predicted the US housing bubble and global financial crisis.
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