Publication Type

Journal Article

Version

publishedVersion

Publication Date

9-2023

Abstract

Australian housing markets experienced widespread and, in some cases, extraordinary growth in prices between 2020 and 2023. Using recently developed methodology that accounts for fundamental economic drivers, we assess the existence and degree of speculative behaviour, as well as the timing of exuberance and downturns in these markets. Our findings indicate that speculative behaviour was indeed present in six of the eight capital cities at some time over the period studied. The sequence of events in this nation-wide housing bubble began in the Brisbane market and concluded in Melbourne, Canberra, and Hobart following the interest rate rise implemented by the Reserve Bank of Australia in May 2022. As of March 2023, the housing markets in Sydney, Canberra and Hobart had broadly regained stability, while Melbourne's return to its normal state is more gradual. In addition, over-corrections against fundamentals are evident in the housing markets of Brisbane, Adelaide, Darwin and Perth.

Keywords

Housing markets, speculative behaviour, economic drivers

Discipline

Finance | Real Estate

Research Areas

Macroeconomics

Publication

Australian Economic Review

Volume

56

Issue

3

First Page

357

Last Page

362

ISSN

0004-9018

Identifier

10.1111/1467-8462.12523

Publisher

Wiley

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1111/1467-8462.12523

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