The record-low interest rates in Australia have prompted widespread borrowing, causing a large uptick in housing demand.
Australia has had a long history of a property price boom due to a favourable environment for borrowers.
The Australian housing market saw a crash in 2011, which is still fresh in the minds of authorities.
The Australian housing market has been subject to many ups and downs in the recent past. The record-low interest rates have brewed an environment of widespread borrowing, causing a large uptick in housing demand. However, the current boom in prices has its roots tied to Australia’s tax breaks, cheap money, and the existing prosperity in the country.
With time the large boom in prices has surfaced again during the pandemic. While many believe the record-low interest rates are to blame, the Australian property market has been gradually rising over the last two decades. The central bank’s monetary easing in 2020 only cemented what the market had long feared the onset of a housing price bubble that has just now begun to deflate. However, as the rate of price rise become slower, a more worrying concern is that the housing market might crash.