 Will house prices fall in Australial?
It may not be as gloomy as some would have us believe. House prices have fallen 3 per cent in the past six months but the housing market is still stronger here than in the US or the UK. According to some economists, this is shown in various ways.
While America has had a lot of foreclosures arising from their subprime loans, Australia, so far, has had few mortgage defaults and we're not likely to get all that many.
Saul Eslake, chief economist of the ANZ Bank, is confident house prices won't fall too far.
His main point is that, unlike the US and Britain, Australia doesn't have an excess supply of housing.
Every year a country with a growing population needs to build more houses. Young people leave home and form new households and immigrating families need somewhere to live.
Many finance experts seem to be singing from the same hymn sheet, telling us that the best reaction to negative equity would be to grin and bear it. There's nothing to be gained by giving up, so you put your head down and do all you can to pay the mortgage, hoping property prices will go back up.
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