Beware of house price corrections, warns ANZ chairman

by Julia Corderoy04 Sep 2014
Careful; the house price boom is going to end – that’s the message that ANZ chairman David Gonski is giving to homebuyers and investors.

The caution comes after statistics released by RP Data this week revealed that capital city house prices have experienced significant increases over the past decade. In the last 12 months alone, Sydney has experienced over 16% price growth and Melbourne prices have climbed over 11%. 

Speaking at the British Australia Chamber of Commerce, Gonski said home buyers and investors mustn’t be so optimistic about capital gains.

"There will come a time when there will be a correction," Fairfax Media quoted Gonski. "The fact is, anyone who believes prices always go up is, I think, a fool."

The looming prospect of a property market correction has been a focus of the Financial Services Inquiry – with APRA, the Reserve Bank and regional banks all submitting concerns to the Inquiry about the consequences a market correction might have on the big banks, as competition in the mortgage lending sector has been on fire.

However, Gonski claims that the big banks are “very aware of history” when it came to financial lending in the residential mortgage market, Fairfax reported.