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Talk of property bubble out of touch

 

Australian Finance Groups Mortgage Index for September shows that concerns of a property bubble building in Australia are unfounded. The September index shows that home loan growth remains subdued at present in the wake of uncertainly following the federal election and the global outlook.

 

The Index also shows that Loan to Value Ratios (LVRs), loans expressed as a proportion of the value of a property, remain at a low level of 63.0%. While this is reflective of softer conditions it also highlights that home owners have made positive steps to reduce debt making them more insulated from external factors.

 

This has meant a stabilization in prices which is good news for buyers who want to take advantage of the current market conditions.

 

On the negative side however, new building approvals have been sluggish. Approvals have fallen by 12% for the 3 months to August which continues to create a gap in underlying stock. Once certainty returns to the market and pent-up demand is released pressure on prices will re-emerge.