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Low interest rates leave market in danger of overheating

Moody's has warned that Australian property is in danger of approaching a bubble.
A New-York based financial body has warned that Australia's property market is in danger of overheating, with a bubble bursting now not seeming as distant a prospect as it has done in recent times. 

The consultancy has stated that low interest rates - which many have called for to be increased - have damaged the market, allowing prices to spiral out of control this year.

In 2014, price rises have been at their highest rate for more than four years, and according to recent reports, Australia is one of the least affordable property destinations in the whole world.

"(This) trend poses some medium-term risks as Australia's real estate market appears to be overheating, with both price-to-income and price-to-rent ratios reaching levels well above the historical averages," said Moody's analysts Bart Oosterveld and Steven Hess. 

They added that the number of people who are coming to buy in the nation, coupled with constraints on the supply of new homes, means that the nation needs to do more to stave off the danger to the future prospects of the sector.

Posted by Steve Douglas

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