Soaring house prices fuel bubble fears

Real Estate

Soaring house prices have fuelled fears a property bubble could be growing to dangerous levels. Over the week the Reserve Bank of Australia (RBA) and Bank for International Settlements (BIS) flagged concerns house prices could be at risk of a correction. Federal Treasurer Joe Hockey has dismissed the warnings and claimed higher house prices are only a reaction to supply constraints. Buyers certainly didn’t seem too concerned over the weekend with clearance rates remaining strong. 
RBA sounds alarms on property prices
The recent build-up in house prices has caught the eye of Australia’s central bank. Minutes of the RBA’s September monetary policy meeting noted the risk of rising prices. The RBA says, “Additional speculative demand could amplify the property price cycle and increase the potential for property prices to fall later”. The warning comes after Governor Glenn Stevens asked home buyers to remain cautious earlier this month and after the official cash rate remained on hold for its 13th straight month. 
Commsec hoses down bubble concerns
FNN asks Commsec Economist, Savanth Sebastian if the Australian property sector is in bubble territory. 
Australian auction results remain buoyant
Sydney recorded an 83 per cent clearance rate from 570 properties for auction
Melbourne cleared 78 per cent from 842 properties listed
Brisbane had a 51 per cent clearance rate from 98 properties listed
Adelaide cleared 74 per cent from 48 reported auctions
Commercial property
Sydney’s north west homeowners are set to get Australia’s biggest public transport project after a consortium including UGL Limited (ASX:UGL) were chosen to deliver the North West Rail Link by 2019.  
Australian Industrial REIT (ASX:ANI) will spend $13.3 million to buy an industrial property at Erskine Park, 45 kilometres west of Sydney’s centre. 
Lantern Hotel Group (ASX:LTN) has bought the Waterworks Hotel at Botany for $8.25 million and agreed to conditional terms to buy the Beaumont Exchange Hotel in Newcastle. 
Diversified property group GPT Group (ASX:GPT) has flagged the potential listing of a new ASX real estate investment trust and been named global real estate leader in the 2014 Dow Jones Sustainability Index.

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