Treasurer Joe Hockey was forced to defend the Australian housing market during a visit to the US this week in an attempt to rectify foreign investor perceptions that a property bubble looms.
In a televised interview with US-based reporter Amanda Drury, Hockey told CNBC listeners that overseas commentators don’t understand the Australian housing market, which has recorded strong price growth this year as a result of low interest rates.
Hockey was asked in the interview if he was worried about a bubble bursting and causing a housing crash like the one the US experienced during the GFC.
“Not at all. A lot of commentators, particularly over here, don’t understand the Australian housing market,” he replied.
“Australia is a long way from a housing bubble.”
Hockey’s comments come just weeks after ANZ CEO, Philip Chronican, dismissed concerns over a housing bubble, saying other factors will take the heat off the property market.
Chronican predicted that weak jobs growth and dampened consumer sentiment will put the brakes on rising home prices.
Nationwide house prices rose 5.8% over the year to mid-September, with Sydney prices up 8.2%.
However, Hockey attributed the recent surge to high immigration and a lack of new homes being built. He also suggested there was a benefit to rising prices.
“Rising house prices in Australia help to make some of the more marginal new housing developments affordable, realistic and deliverable,” he said .
“In turn that increase in supply helps to manage the market.”