IMF warns of home ‘asset bubble’ risk

The International Monetary Fund has labelled Australia's property boom an “asset bubble” which is destabilising the economy. IMF said also that Australia faces more interest rate rises to keep inflation in check. As house prices decline the economy will be negatively affected in several ways, the IMF stated. New residential property investment has been as high as 1 per cent of Australia's GDP so lower levels will lead to slower growth. Lower property prices will also affect owners' perceptions of their wealth and result in less consumption.

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