Famous American economist, Dent, stated that the rise in the house price in Australia is a bubble and it is sure to collapse at the start of this year. He said that the current Australian house prices are unsustainable and would at least fall by 27% in the main cities like Sydney and Melbourne, in a couple of years.
Chinese housing bubble
Dent informed that the bursting of the Australian home price bubble will be triggered by the Chinese housing bubble bursting. The main reason for this bursting is that most of the properties in Melbourne and Sydney are owned by foreign buyers and thus, they would not last very long. According to him, the Chinese housing bubble would be very high than that of Australia’s.
What if Australian bubble does not burst?
Dent says that he is very sure that the Chinese bubble is about to be burst. He said that he cannot understand why and how the Australian house price would go up. Now the question is what if the Australian bubble does not burst?
The RBA and the Australian economists confirm that there is no bubble in the house price. They say that Australia is a very large country with unique economy. The whole population is concentrated in the few conurbations. These factors would count against the basic rules of the bubble and the bursting.
However Dent as reported in the Sydney Morning Herald, disapproves the statement. He said that nobody in the government can confirm that there is no bubble in Australian house price. He said that he has studied every bubble in the history and is sure about the burst. He confirms that the biggest bubble in China would soon burst. The effect of the burst would affect the home price in Australia. This would bring the home prices down within a very few years after the China bubble burst. Now, it is up to you to decide which side to believe.