The Outlook for Australian House Prices - May 2008

After several interest rate hikes and increasing evidence the Australian housing market is softening, the outlook for house prices has deteriorated. Some are still talking about big gains on the back of the shortage of housing whereas others are talking about up to 30% declines in house prices as overvaluation and excessive debt levels are unwound as the economy deteriorates. The picture in the US where house prices are off 15% from their peak and in the UK, parts of Europe and New Zealand where house prices are starting to fall suggest reason for concern for Australian house prices.