Soaring house prices may spark mortgage crisis - economist Brian Haratsis
Nathan Mawby From: Herald Sun March 10, 2011 8:18AM
BOOMING house prices could trigger a mortgage crisis in Australia, a property researcher says. The nation could face a sub-prime crisis like the one in the US that sparked the global financial crisis, said Brian Haratsis, chief economist at Macro Plan Australia.
He warned that without government intervention on house prices battlers at the bottom end of the market would be worst affected.
He is also predicting at least two rate rises this year, pushing home loan interest rates as high as eight per cent for some punters and freezing the market.
"Australia is going to be extremely exposed between 2012-15 because people won't be able to afford to buy a house," he said.
"A lot of people could wind up with negative equity and we could have a sub-prime issue on our hands."
Start of sidebar. Skip to end of sidebar. .End of sidebar. Return to start of sidebar. He warns that all parts of the property market could feel the effects if another "Black Swan Event" like a market crash in China occurs.
Mr Haratsis has been monitoring the industry for 30 years and believes house prices are inflated by about 20 per cent at the moment.
He will be speaking at the first ever Australian Mortgage Conference in Sydney today, which will discuss this and other issues facing the lending market in the coming decade.
