An Australian property market crash would eyeball Donald Trump’s impeachment, International trade wars and Brexit as a major threat to the global economy, according to one of the world’s most prestigious banks.
Deutsche Bank last month revealed its Top 20 risks to global financial markets in 2020.
On the list was: “House price crash in Australia, Canada, or Sweden”.
Its inclusion appears to confirm a reality many experts suspect but are too nervous to thoroughly contemplate – Australia’s property market remains over-inflated and is headed for a severe correction.
Despite the 2018 slowdown, which saw prices in some parts of Sydney and Melbourne drop by as much as 20 percent, the market has rebounded with impressive speed in the past six months.
Record low interest rates and relaxed access to finance compared to 12 months previous have been the main drivers behind the current rejuvenation.
Rather than stimulate the broader economy, as hoped, the current 0.75 cash rate has encouraged people to borrow more money, increasing Australia’s already heavy household debt level.
Further acceleration is expected in early 2020, thanks to the Federal Government’s incoming five percent deposit guarantee for up to 10,000 first home buyers.
According to the study, these dynamics leave many Australians highly vulnerable to rate rises in the future.
So, while the current conditions might be conducive to lending, borrowers must think long term to avoid falling into the risk category.
Interlease has been helping Australian individuals and businesses access finance on the most favourable terms, and with a firm eye fixed on the future, for almost 50 years. With rates low and competition among lenders high, now is a great time to take advantage of our team’s expert advice. Call us today.