Australia tipped for price surge

Property in Australia could be set to see a large rise in price in the next few years, an economist from its central bank has predicted.

Head of economic analysis department at the Reserve Bank of Australia Tony Richards observed in a speech: "Over the past five years, housing prices have risen less rapidly than incomes, after a long period when the reverse was true."

However, economic recovery, rises in interest rates and a high level of population expansion could all change this, due to a supply-side deficit.

While more homes are being built, there could also be a lack of labour in the construction industry when the jobs market improves, Mr Richards argued, something that could limit the sector's ability to deliver enough homes.

The lack of supply will prevent Australia suffering any new slump in its property market, two economists recently said.

AMP Capital Investors chief economist Shane Oliver and CommSec chief economist Craig James recently cited this factor that will underpin property values, news.com.au reported.

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