We don’t have a property price problem in Australia

I am writing this piece in the first week in June. Glenn Stevens has just called Sydney house prices “crazy” and all the talk is of APRA. My concern is not so much the level of prices in Sydney now as with the trajectory of prices in unchartered territory.

I haven’t seen a Sydney property market this strong in an environment where interest rates are so low and forecast to continue to be so low. Normally by now, if the Sydney property market was a representation of the broader economy, rates would have risen long ago. Most other markets in Australia are significantly more subdued and in some cases going backwards.

And that is exactly the point. We don’t have a property price problem in Australia – what we have is a very strong market in Sydney. I think most people can agree that it is no one’s interest for large numbers of Sydney families to be excluded from home ownership.

The Sydney market is strong for Sydney factors, not financial market factors.