No housing bubble, say Aussie banks

Soaring home prices in Australia’s biggest cities don’t necessarily mean the country is in the grip of a housing bubble, according to the heads of the nation’s biggest banks.

Chief executive of National Australia Bank Ltd (NAB), Westpac Banking Corp and Commonwealth Bank of Australia all said while they were worried about elements of the housing market, prices were not over inflated.

“I would draw the distinction between a speculative bubble in prices and prices beyond what fundamentals would justify,” Westpac’s Brian Hartzer told the parliamentary committee in Canberra yesterday. A bubble was not occurring in Melbourne or here, where house prices had risen the most, he said.

“There are increasing risks, but I still believe the answer is no,” said NAB chief executive Andrew Thorburn.