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Matthias Knab, Opalesque: PIMCO writes on Harvest Exchange:
Does air quality in Beijing have anything to do with the property market in Australia? The answer is probably yes.
Life in Australia, with its promises of clean air, abundant sunshine, quality education and universal healthcare, has attracted people from around the world. This demographic trend has had profound effects on the country's housing market in recent years and, by extension, its major banks.
Today, 28% of the Australian population was born elsewhere, up from 18% half a century ago. Australian residents born in China, for example, have more than doubled in number over the past decade alone. As the country's population has grown, demand for housing has increased, and home prices have appreciated significantly across major cities Sydney prices have risen more than 60% since 2011. Housing itself has also evolved: While detached houses remain the traditional choice, city apartments have proliferated. Apartment construction now makes up almost 50% of new dwelling approvals in Australia, up from less than 20% historically.
The state of the housing market has important ramifications for the financial sector not least because housing loans constitute about 60% of lending at the major Australian banks. Keeping housing risks in check has therefore been high on policymakers' ...................... To view our full article Click here
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