As 2014 draws to a close, Australian Broker looks back on the stories that shaped the year.
One story had the Australian Broker audience engaged more than any other, and it focused on the galvanising issue of the possibility of a property bubble.
In May, Australian Broker reported on a submission to the Murray Inquiry which predicted Australia could be headed for a GFC-style meltdown due to the high levels of mortgage debt (House price bubble will burst soon, predicts director
). In his submission to the Financial Services Inquiry, Puzzle Financial Advice director Bruce Baker said historically large housing price and large personal debt bubbles were the same conditions as those which led to the “near collapse of the US banking system” in 2008.
“Australia has the biggest house price bubble in its history, a bubble that has been funded by Australia's historically-largest private debt bubble (which is predominantly mortgage debt).”
Baker argued that Australia ws not prepared for a large house price correction, and should change regulations to prepare. He predicted that a housing crash could see a price drop of more than 30%.