ACT'The first time unemployment starts to rise, Australian house prices are going to be falling': OECD official'The first time unemployment starts to rise, Australian house prices are going to be falling': OECD official
An Organisation for Economic Co-operation and Development senior official has warned that Australia was vulnerable to "worrying" falls in house prices.
The economist Adrian Blundell-Wignall said Australia was so interconnected to the global economy that it would not escape any continued international fallout.
“The world is so globalised and interconnected that if it goes down, things will get much worse for Australia,” Dr Blundell-Wignall said on a visit to Australia, as reported by the Australian Financial Review this morning.
“The biggest problem for Australia that worries me personally is house prices.”
“The first time unemployment starts to rise, house prices are going to be falling.”
His comments comes as the ABS unemployment rate rose slightly to 5.2% in June, and capital city house prices have fallen by an average of about 3.7% over the past year.
Blundell-Wignall used the example of his brother who had recently bought a small apartment in Perth for $340,000.
“In a country like France, in a very nice city, you can buy something three of four times better than that [for the same price],” he said.
Blundell-Wignall, who once headed the research department at Reserve Bank of Australia, warned in pre-gfc 2007 that there was a giant rolling bubble of excess liquidity moving from market to market, inflating asset prices that would burst with devastating consequences.
In 2009 he suggested the global financial crisis was far from over and that the world faced a serious risk of another credit crunch and a double-dip recession.
