One of Australia’s most experienced property analysts says investors and home-owners have no need to be concerned about pricing levels for housing.

Scott Keck – Executive Chairman of leading independent property advisory firm, Charter Keck Cramer, which employs 35 analysts working full-time on research – says bubble talk is over-blown. He says the reality is that Australians have strong equity (the difference between the market value and the mortgage), which underpins markets nationwide.

“Is there a bubble? Our well-researched view is definitely not,” Keck told The Property Education Company seminar in Melbourne.

Keck says the idea of a bubble infers that the property market has “too much air”.

“It suggests that it’s pumped up so high that any second it’s going to pop and values are going to fall,” he says.

“The balloon is fairly full but it’s not going to burst because residential markets have cooled off. There’s still growth there to make it sensible to invest, but not as much as over the past five years.”

Keck says the idea of the balloon bursting suggests a scenario where something economically will occur to pop it.

“The only thing that could do it is a sharp increase in unemployment or a sharp increase in interest rates. I do think unemployment will rise but it won’t be so sharp or so quick. Real estate rates may rise in 12-18 months’ time but it will be gradual. It won’t be sharp or quick.

“So as far as the bubble is concerned, we don’t see anything domestically that could cause it. We think values will stay where they are. Nothing dramatic will happen.”

Keck says overseas commentators predicting Australian values will fall 40% make the mistake of comparing Australian incomes to the value of our housing. What they should do, he suggests, is compare values with the level of debt on those houses.

“In Australia we have a lot of equity,” Keck says. “That’s where the real analysis lies. Australian residential markets are not over-borrowed.”

Recent research shows that household assets are 4.6 times higher than household debt – and housing assets 3.5 times housing debt. That means the average household has considerable equity, with assets greatly exceeding the amounts owed in loans.

Most households with mortgages are ahead on their loan repayments, with the averaging situation being two years ahead on mortgage commitments. Mortgage delinquencies are around 1% of total loans.