Australia not in housing bubble: ANZ Chief Economist

Speaking at CEDA's 2014 Economic and Political Overview in Brisbane, Mr Hogan said housing prices across Australia are different which is a good indication there is not a bubble.

"The housing market is in the early stages of a solid cyclical upswing," he said.

"The bottom line is with a shortage of housing, house prices rising, interest rates low and credit availability the sector's coming back."

Mr Hogan said in capital city markets, especially Sydney and Melbourne there is increased demand for housing which is likely to continue.

"We expect a 15-20 per cent lift in home prices between 2013 and 2015," he said.

Housing also has "new participants" in the market especially from China and investors have increased borrowing with Australian banks, Mr Hogan said.

On the topic of emerging economies, Mr Hogan said Australia should not be too concerned with China's economic slowdown because commodity prices will remain strong as other export markets develop industries.

"Beyond China there are many countries such as India and Indonesia that want to replicate many of the characteristics of what China has done and that is build a domestic steel industry to service the building of modern infrastructure," he said.

Mr Hogan said the recent downturn in developing countries is due to the re-emergence of the US economy.

"A shock hits the emerging world…every time the US economy improves and recovers and we see US monetary policy tighten…that's what's happening now," he said.

Mr Hogan also said there will be a shift in the domestic job market and more people will return to work in metropolitan centres and capital cities.

"The jobs that are being lost in mining are going to be replaced by jobs in construction," he said.

Also speaking at the event, Queensland Treasurer, Tim Nicholls said there was a drop in the state's unemployment rate.

"We have gone from having the highest unemployment rate in the country…to the second lowest," he said.

"There are 30,000 more jobs now in Queensland than there were when we came to government."

Mr Nicholls also said there is no evidence of a housing bubble in Queensland.

"In Queensland we're seeing steady but moderate growth in house prices, so we're not overly concerned about a bubble," he said.

"We think the Queensland growth rate is about right.

"We'd like to see more growth coming through in terms of the number of houses and approvals coming through, but in terms of prices, we're not seeing a bubble."

However, Australian Council of Social Service CEO, Dr Cassandra Goldie said there are economic problems that can arise from an increase in housing prices.

"We are sitting on a time bomb in terms of affordability," she said.

"We're very concerned about what's happening for people who are on low incomes."

There needs to be a public discussion about current housing incentives that are designed for wealthy and existing property owners, she said.

"We have a real challenge in having a sensible debate about the future in terms of the negative gearing arrangements," she said.

"Wealth accumulation and growth is with existing home owners whether you're an investor or owner occupier and there is a real problem with people being able to get into the market and that then has a flow on effect in terms of affordability for people who are renters."

Board of Taxation Chair, Teresa Dyson also addressed the event, discussing tax reform and business red tape.

She said the Board of Taxation engages in discussions with businesses across Australia about the tax system.

"What we do hear from business is a call for clarity, certainty and an ability to understand what their framework is," she said.

Businesses don't like the "knee jerk" announcements about tax reform but are not against changes all together, she said.

"It is very important to establish a pipeline or forward looking plan, a road map so that business can see what's coming down the track…we (business) don't mind if there is change, if it's going to address some issues or provide more certainty," she said.

Speaking about red tape and regulation, Ms Dyson said the Board does not create policy but rather makes recommendations.

"We do have a commitment…to make recommendations that can practically be implemented but in a way that minimises the impost on taxpayers," she said.

On the topic of fiscal policy, Export Finance and Insurance Corporation (EFIC) Chief Economist Roger Donnelly said Australia does not need to panic in the short term.

"We need to keep our eye on medium run fiscal stability," he said.

However Mr Donnelly said Australia has a promising period ahead in exports across most industries.

"I do see export dynamism, I do see the prospect for the Aussie dollar staying strong but at the same time, an ability on the part of the Australian economy to provide full employment and well-paying jobs, we are going to have to keep our eye on the reform agenda," he said.

"We do have a pretty promising outlook ahead, there are some risks…but from my perspective in the EFIC…I see a lot of export dynamism both among resource exporters but also in the non-resources export space."