Housing boom is a necessary evil: HSBC

We're on the verge of a housing boom, according to the HSBC Bank, yet they also believe the bubble is not worth getting worried about too soon calling the price growth a "necessary evil".

With house prices having risen 9% since their May 2012 lows, and up 5.5% over the past year, it's clear that momentum is picking up.

In their recent Macro Australian Economics' Downunder digest, chief economist for HSBC, Paul Bloxham and economist, Adam Richardon, noted that growth has recently accelerated with prices up 3.7% in the third quarter of the year.

"Other indicators are consistent with continued solid growth in prices. Auction clearance rates - a timely indicator of housing market activity - are holding at levels that suggest a forthcoming housing price boom," the report notes.

This didn't come as a surprise to the report authors who, in Marcha and based on modelling, forecasted high single-digit growth over the year.

This was partly attributed to lower mortgage rates.

"A housing boom is largely a positive development. In fact, it is part of the RBA's plan to rebalance growth as the mining boom fades. At the same time it will present some challenges," they said.

Developers and households, they explained, are unlikely to build new houses unless prices are increasing.

"In this way, a housing price boom is a necessary "evil"," they said.

However, despite the group and current discussions, they do not believe we are heading towards a housing bubble. 

"The starting point is also not as worrisome as some think: prices are high, but not unusually high when compared with similar countries. As we have said many times before, Australia does not currently have a housing bubble."