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Thursday, February 13 2014

ONE of the country’s biggest banks expects house prices to rise as much as 20 per cent before the end of next year, with lifts predicted to begin soon in parts of Queensland.

ANZ chief economist Warren Hogan told the Committee of Economic Development of Australia that the “housing market is at the early stages of a solid cyclical upswing” fed by low interest rates and market shortfalls.

“We expect a 15-20 per cent lift in home prices between 2013 and 2015,” he said with long-awaited rises already underway in Sydney and Melbourne.

“I am sure Brisbane, Sunshine Coast and Gold Coast will lift in terms of house prices in the next little while,” he said in the Sunshine State yesterday.

Mr Hogan said investors and “new participants” in the market — such Chinese and other overseas buyers who typically did not need to borrow in Australia - were pushing increases.

“They’re quite active and their judgment on what is fair value for property is very different from others in the market,” he said. “I think that’s something to keep an eye on.”

But experts agreed Australia was not in a house price bubble yet.

Commonwealth Bank head Ian Narev said: “We never say never — but we don’t think we are seeing even the early signs of a bubble at the moment.’’

Queensland Treasurer Tim Nicholls said there was no evidence of a housing bubble in the state.

“In Queensland we’re seeing steady but moderate growth in house prices, so we’re not overly concerned about a bubble here,” he said. “We think that Queensland growth rate is about right. We’d like to see some more growth coming through in terms of the number of houses and approvals coming through, but in terms of prices, we’re not seeing a bubble coming through here.”

Mr Hogan agreed it was not a bubble “but it could be”.

“If you whack the big four banks together, the system is only growing at five per cent, even though we’re writing new mortgages at 18 per cent ... Overall credit growth is still quite tepid so you wouldn’t say that that’s a bubble.”

Posted by: Greg Carroll AT 08:19 pm   |  Permalink   |  Email