Knowledge@ASB: Housing Prices

Interest rates in Australia may be on hold for the time being, but that may not make those with a hefty home loan sleep any easier, thanks to talk of a bubble in the Australian housing market. One estimate is that residential property may be overvalued by as much as 50%, a figure which has made home owners, prospective buyers and investors understandably nervous. And there are signs that some of the drivers of housing demand may be hitting reverse. Among them are changes in the rules preventing some foreign investors from investing in residential property. Julian Lorkin of Knowledge@Australian School of Business asks Glenn Otto, a professor of Economics at the Australian School of Business, for his analysis.