The Drastic Impact of the House Bubble on the Housing Markets in Australia and UK
FOR IMMEDIATE RELEASE
Victoria, AUS, 24 January 2023— New research suggests that the housing market in Australia and the United Kingdom may be experiencing a bubble in 2023. A bubble occurs when prices in a certain market, in this case, the housing market, become artificially inflated due to a lack of supply or excess demand. This can lead to unsustainable levels of growth and, ultimately, a crash.
According to experts, the current housing market in Australia and the UK is being driven by low-interest rates, a lack of available properties, and an influx of foreign investment. These factors have combined to create a perfect storm for a housing bubble.
Raj, the owner of Move My Stuff, said, “The market is in danger of a severe meltdown due to high-interest rates. Even though the reason being claimed is to bring inflation under control, this can lead to a market crash.”
The large banks forecast that 2023 will be a year of huge price drops. Of the four major banks, NAB anticipates a combined 11.4% decline in capital city pricing.
Adelaide Timbrell, Senior Economist at ANZ, says the decline in housing prices is not due to rising distress for borrowers but rather, reflects lower borrowing power.
Interest rates as a proportion of household income reached 6 per cent in September after falling to a 30-year low of 4.4 per cent at the end of March.
In compliance with the Housing Accord, the government has also begun to establish on a million new houses between 2024 and 2029.
Julie Collins, the housing minister, stated that the government was dedicated to addressing problems with the housing market.
“It’s been clear for a very long time that housing supply and affordability is one of our country’s biggest challenges – the key difference now is we have a federal government that is seriously facing up to the challenge,” she was quoted saying.
In UK, it is expected that the house marketing will go slow as it enters a recession. The downshift is expected to escalate with price declines between 5% and 12%.
Various real estate experts have subjected their views on how the 2023 market can feel like nobody’s market.
The researchers also noted that the bubble may be exacerbated by a lack of regulation in the housing market. They suggest that governments in both countries should take steps to address this issue, such as implementing stricter lending guidelines and increasing the supply of affordable housing.
However, it’s worth mentioning that some expert disagrees with the idea of a housing bubble in Australia and UK, as they believe that current market conditions are a result of long-term changes in demographics and economic growth rather than a house bubble.
The research team encourages the government to keep an eye on the market trends and take action if necessary.
In a nutshell, it not going to be all dark.
Numerous experts forecast that by the end of 2023, interest rates will stabilise and that home prices would increase across the board in 2024.
Upgraders, movers, and downsizers seem to have a reasonably steady need for housing finance despite rising rates.
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