2012 property market growth a "suckers' rally": Steve Keen

The Australian property market is in a “suckers’ rally”, property bear Steve Keen told an economic conference last week.

He has attributed recent house price growth to speculative activity by investors.

“All the growth in debt has come from people speculating on rising house prices, not by people owner-occupying,” he told the Bloomberg-organised conference, Fairfax Media reported.

''I think we're going through a rally - I'm calling a suckers' rally.''

The University of Western Sydney academic said sustained growth in the sector was unlikely, News Limited reported from the same conference.

All the turnaround since 2012 has been speculators getting into the market expecting prices rises,” he said.

He said Australian households were already highly indebted when compared to other countries.

"That is what is going to put the cap on price appreciation continuing."

Keen first called the market a "suckers’ rally" in October last year, blaming low interest rates.

He predicted the rally would fizzle out with the housing market not responding to interest rate cuts because consumers already carried too much debt.

RP Data says the Australian capital cities are now approaching their previous peaks.

Sydney prices are now 0.1% above their November 2010 peak.

But Melbourne prices are 6.2% shy of their 2010 peak, Brisbane is still 9.5% shy of its November 2009 peak, Adelaide is 5.5% lower than its September 2010 peak and Hobart is 8.7% lower than its November 2009 peak.