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18 May 2015
ASIC's Medcraft warns of Sydney/Melbourne property bubble
FXStreet (Bali) - The Head of ASIC (Australian Securities and Investments Commission), Greg Medcraft, has warned of a property bubble in Sydney and Melbourne, speaking to the Australian Financial Review.
Medcraft reminds that "history shows that people don't know when they are in a bubble until it's over." The ASIC Chief appears quite worried about the Sydney and Melbourne property markets, noting that "in housing, the long-term average income to average price ratio is four to five times but at the moment it is at historic highs."
Medcraft adds that "there is always danger when rates get so low, as that's when people start borrowing when they can't afford it; what generally happens is rates starts to rise which affects your ability to pay, and rate rises can actually bust a bubble, so you end up with a double whammy."
Medcraft reminds that "history shows that people don't know when they are in a bubble until it's over." The ASIC Chief appears quite worried about the Sydney and Melbourne property markets, noting that "in housing, the long-term average income to average price ratio is four to five times but at the moment it is at historic highs."
Medcraft adds that "there is always danger when rates get so low, as that's when people start borrowing when they can't afford it; what generally happens is rates starts to rise which affects your ability to pay, and rate rises can actually bust a bubble, so you end up with a double whammy."