Australia has experienced one of the world’s biggest home price booms, driven by near world record levels of household debt.
This house of cards looked to be teetering, with double-digit price falls in Australia’s two biggest cities — Sydney and Melbourne — over the past couple of years.
But now policymakers have pulled out all the stops to halt the market slide — interest rates have been slashed to record lows, lending restrictions loosened and the Government is offering to help first home buyers buy with a very low deposit.
The early signs are that this is working, with price falls easing, and now even reversing, in the two biggest cities.
But house prices in these cities remain out of reach for many aspiring buyers, while debt levels around the country remain at record highs.
This has many analysts worried that Australia’s house of cards only needs to see a run of economic bad luck to come crashing down.
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