COMMONWEALTH Bank’s global mission to reassure investors about the health of the Australian property market continues to attract attention, with fresh claims the bank had been selectively quoting data.
Online investment forums and housing blogs were alive with talk yesterday that an 18-page presentation used by the bank had replaced unfavourable housing affordability figures for Australia’s capitals with ones showing housing costs were not out of step globally.
One slide compared Australian housing affordability with several international cities, citing figures from US-based urban planning research house Demographia and investment bank UBS. It showed housing in Sydney and Melbourne was more affordable than in cities such as San Francisco, New York and Vancouver. But the slide used UBS data exclusively for the Australian cities, and Demographia data exclusively for the others.
A spokesman for CBA yesterday dismissed the claims, saying the information contained in the specific slide was prepared by UBS and the bank had no input into the numbers. A UBS spokesman said the investment bank conducted a ”bottom-up” analysis of Australian housing prices relative to income, based on deeper information compiled by the Australian Taxation Office.
The Demographia figures relied on Australian Bureau of Statistics numbers.
The CBA presentation is aimed at heading off mounting global concerns that the Australian property market is behaving like a bubble. Hedge funds have been circling local bank stocks betting the property market is overvalued and a collapse in prices will cause steep lending losses for banks.
US investment guru Jeremy Grantham recently said Australia had an ”unmistakable housing bubble” and prices would need to pull back sharply to return to trends. CBA said such views were based on incomplete analysis. It also pointed out that population growth and excess demand had been a key driver of price appreciation – factors unlikely to reverse in the near term.
Source: Story by Eric Johnston -The Age Melbourne