Australia reluctant to pop housing bubble
﻿Experts are warning that while the Australian property market is known to be overvalued, and while it is known that a correction is necessary, the government simply cannot afford to allow the market to burst, as the effect would be too detrimental to the Australian banking systems. Despite these concerns, Australian regulators have in fact tightened the banks' lending to the property sector, by forcing them to hold a higher percentage of their lending as reserves. This report also highlights that in the event of ﻿political or economic turmoil in China, a huge wave of Chinese ﻿ ﻿﻿demand will hit the Australian property market; this article claims that Australia would not be prepared for such an influx.﻿

Property rises might be taking a breather after a year of superheated growth, but one investment banker has bad news for most aspiring home owners: Australian house prices will keep getting higher and the government will do nothing to prick the bubble because the country simply can't afford it.

And any hint of instability in China could send a wave of new money into the Australian market, says Saxo Capital Asia macro strategist Kay Van-Petersen.

Houses and apartments in Australia, particularly Sydney and Melbourne, have never been more expensive. The median house price in Sydney hit $1 million in July, said the Domain House Price Report, and investment bank Goldman Sachs estimates the markets in Sydney and Melbourne are almost 20 per cent overvalued.

House prices are on track to rise by a whopping 9.8 per cent this year, say numbers released this week by the Australian Bureau of Statistics, which showed national price growth was 4.7 per cent between the March and June quarters.