Wednesday, November 05, 2003

Australia's bubble set to burst, warn experts: "Australia's housing market has been identified as one of the most vulnerable in the world, with international bankers warning that rising interest rates could trigger a collapse in residential property prices. The annual survey of 231 bankers, regulators and analysts in 31 countries by the British-based Centre for the Study of Financial Innovation said the biggest bad loan threat lay in soaring consumer debt.

"The most frequently mentioned 'dodgy' sector was property, specifically domestic housing ... 'The most vulnerable countries are the UK, Australia, Holland - also the US, though the bubble is less,' an economist with a US bank said." ... Last week Westpac's chief executive David Morgan warned that the property market was overvalued by 20 per cent. Official figures show that in the six years to June, capital city prices rose 92 per cent nationally and 119 per cent in Melbourne. In September, housing credit rose by 2.1 per cent, a level equalled only once in 27 years of monthly credit statistics. In real terms, excluding inflation, it is the highest monthly growth ever."

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