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Is there a housing bubble in Bentleigh?

By Matt Hurlston

There has been a lot of talk in the media recently about a 'housing bubble' in Melbourne and Sydney.

The historically low interest rates means real estate in Bentleigh has become more accessible to homebuyers and investors, with mortgage repayments easier to manage.

This in turn has driven property prices upwards – some think disproportionately.

What is a property bubble?

A June 2014 report from the Reserve Bank of Australia uses the Stiglitz (1900, p.13) definition:

"If the reason that the price is high today is only because investors believe that the selling price will be high tomorrow – when "fundamental" factors do not seem to justify such a price – then a bubble exists".

Therefore, a housing bubble is when prices are disproportionately high, thus can be a risky business to venture into as values may fall suddenly when the bubble 'pops'.

Market easing, not bursting

According to statistics in a July 10 release from the Real Estate Institute of Australia (REIA), lending figures show that May 2015 was the fourteenth consecutive month of small declines in the amount of lending, provided refinancing is excluded.

"The moderating housing lending suggest any concerns of an over heating property market should be laid to rest and also allay fears of an imminent bubble," said REIA President Neville Sanders.

What does it mean for real estate in Bentleigh?

While there is no denying that the market is still very hot, property prices should start to remain steady with the moderation of lending. The confirmation of the bubble as a myth will increase the confidence of buyers and sellers alike.

If you are considering real estate in Bentleigh, talk to Matt Hurlston and the team at Ray White Carnegie. With our professional knowledge of the area, we can take you through the whole process of buying or selling your home.

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