Property bubble is 'bulldust': economist

“We’re not seeing price growth anywhere near the levels that we’ve had in so-called previous house price booms,” he said.

“The macroeconomic underlying factors are not conducive for a boom. We’ve had very modest wages growth in the economy at the moment, we have a low inflation economy that means low wages growth and low profit growth, the stock market has grown a little recently but it’s still very modest and still well below its 2007 peaks."

Dr Wilson explained that comments made about the prospect of 20 per cent house price growth in Sydney over a year were "nonsense".

“That’s not going to happen,” he said. “We don’t have the drivers that will instigate that type of house price growth over a year and if we did, it would be the second highest ever recorded in Sydney – the highest being 22 per cent in 2002.

“It makes very exciting reading – the boom, the bubble – but it is the boom, the bubble and bulldust at this stage, and I think we will see a moderation in house price or housing market activity into the New Year given the prospects of a declining economy.”

Any shake-up to the economy, such as rising unemployment, would act as a moderator to house price activity.

“There’s no secret that a lot of what’s happening in Sydney is being driven by investors. We have that flight to yield, [which] is no surprise given the underperforming stock market, low deposit rates and house price growth,” he said.

“What we are starting to see coming through is a trend of diminishing yields – yields in Sydney look to be dropping below four per cent.

“Of course, that will be a disincentive for further investor activity, so that’s one of the stabilising factors that our housing market instigates to correct unsustainable price growth.”