Why the Australian property bubble will not burst
Shane Oliver, Chief Economist at AMP Capital Investors, has admitted the existence of an Australian housing bubble but has maintained that it will not burst; instead, activity will merely begin to slow. Oliver also claimed that property markets in Sydney and Melbourne are overvalued with high property prices driven by the demand from a growing population and ‘euphoric buying’ - the quick purchase of a property from fear of ‘missing out’ on what could be a bargain.
The property markets in Sydney and Melbourne have gone too far, AMP Capital Investors' chief economist Shane Oliver said at the Asia-Pacific Banking & Finance's breakfast in Sydney on Tuesday.

The market is overvalued despite higher property prices being driven by "fundamentals" such as demand from a growing population.

"Interest rates are at record lows and [are] lower than the 1950s - before Marcia Brady was born. The market has gone too far, is overvalued and there is a high degree of euphoric buying," he said.

Dr Shane Oliver dismissed the idea that foreign buyers were responsible for driving property prices up. Jim Rice

Sydney property prices have risen close to 20 per cent in the past 12 months and Melbourne, 12 per cent. Since the last property low in 2012, dwelling prices have increased 30 per cent nationally, fuelling fears the market is overheated and heading for a crash.

Dr Oliver said a "bubble" was not just characterised by "flipping" – a term used to describe speculative buying and selling of properties.