PHOTO: What’s in store for Australia’s property prices when international borders re-open? Source: REUTERS/Will Burgess WB/MP
The reopening of Australia’s international borders could have the potential to put further pressure on already-high house prices and even overheat the market entirely, experts warn.
Recent Corelogic data shows Australian house prices jumped a huge 2.1 per cent in February in what was the largest month-on-month increase in 17 years.
The data showed that Sydney’s median house price increased by 4.8 per cent over the last three months while Melbourne’s median house price rose by 4.2 per cent.
AMP Capital chief economist Shane Oliver told Domain Group that a careful and slow and gradual reopening of international borders is needed to ensure a sudden spike in housing demand doesn’t send house prices skyrocketing even further.
He points out that rather than allow immigration to suddenly jump back to what it was before, by gradually phasing back its return, the property market would be able to adjust without becoming even more overheated.
“If we were to allow a return to normal immigration levels then you’re suddenly doubling demographic demand again at a time when the property market is still hot from low interest rates, then that could cause a real problem in terms of adding pressure on prices and worsening affordability,” he said.
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