Bubble fears as Aussie home prices soar

[SYDNEY] Gigi Wong beat four other bidders in an auction of a three-bedroom Sydney house with peeling wallpaper, cracked doors and an overgrown backyard by paying A$856,000 (S$1.01 million), 14 per cent more than the realtor expected it to fetch.

"I'm not sure if I paid too much," said Ms Wong, a University of Sydney accountant, after winning the bidding war for the investment property in an inner-west suburb where prices have tripled in the past 15 years. "Since I have capacity to borrow money, I should utilise it."

Australia, where housing accounts for about 60 per cent of average household wealth compared with a global average of 45 per cent, joins countries from Canada to China seeing rapid price gains amid low borrowing costs that are sparking fears of a housing bubble. Constrained housing supply and demand from investors are driving prices higher, overpowering the downdraft from slower economic growth and a rising unemployment rate.