No Australian housing bubble, but watch Sydney: HSBC's Paul Bloxham

Economist Paul Bloxham is worried about the Sydney property market.

Speaking at the Australian Mortgage Innovation Summit, HSBC’s chief economist, Paul Bloxham, said the only housing market that the RBA and APRA needed to be cautious of was Sydney. 

"In Sydney, this is going to be quite a challenge.

"The rest of the market doesn’t look over inflated.

"I don’t think there is a housing bubble in Australia.

"I think that if Sydney sees the same trends as we have seen over the last year or two, that is house prices is running at an annual inflation rate of 13% year on year, then if that continues for very much longer than you will need to see prices at some point will come down.”

The summit was hosted by Asia-Pacific Banking & Finance, and reported on by Australian Broker Online.

Bloxham said the Reserve Bank should follow New Zealand's macro-prudential policies, in the form of LVR caps.

“Those tools were effective for a very short period of time, but then the RBNZ followed up with lifting interest rates,” he said. 

“We had the RBNZ lift interest rates by 100bps last year between March and July. It was really probably that lift in interest rates that was the main thing that kept the housing market contained in the end.”