Australia won’t see a US style house price crash:Reserve bank chief

Australian house prices probably won’t crash, like those in the United States.

That’s the opinion of Reserve Bank Deputy Governor, Ric Battelino.

He explained why, while addressing a conference on bankruptcy in Sydney yesterday.

Mr Battelino said America had almost one year’s supply of newly built homes, ready for sale, at the end of last year.

“US house prices stopped rising essentially because the supply of houses overtook demand,”  he added.
Mr Batellino said there was no similar “overhang” in Australia.

“In fact the consensus is that there is currently a shortage of dwellings,” he added.

Mr Battelino said US builders had been forced to sell homes, in a falling market.

He said , too, that the situation in the United States had been made worse because lending standards had deteriorated.

Mr Batellino said that had not happened to anywhere near the same extent in Australia.

He said Australians should not lose heart, in the current financial crisis.

Indeed real household disposable family income had been rising at an average rate of 6.1 per cent a year, over the five year period, before the present crisis hit.

“The growth in household incomes in Australia greatly exceeded that in any other developed economy,” Mr  Batellino said.

He said there is no reason, even now,  to doubt that past patterns will be repeated and that growth will pick up.

“Australia remains, after all, a very dynamic economy,” Mr Batellino said.