Sunday, January 28, 2007

Housing Bubble is Global.


Australian homes are 'severely and seriously unaffordable': report
30 January 2007

Housing affordability in Australia ranks among the worst in the world, a new study has revealed.

The 3rd Annual Demographia International Housing Affordability Survey found Australia to have the most pervasive housing affordability crisis of all the countries in the study. The survey looked at the housing markets in Australia, Canada, Ireland, New Zealand, the UK and the US.

The study also rated every capital city in Australia as 'seriously' or 'severely' unaffordable in the global study of 159 cities. A city is deemed unaffordable when the median house price passes three times the median household incomes. Housing is 'seriously' unaffordable when it passes four times median household income and 'severely' unaffordable when it passes income five times.

Sydney was named the most unaffordable city in Australia and ranked seventh of the 25 most unaffordable housing markets in the world. Perth, Hobart and Melbourne also joined the list. Median prices in Sydney are 8.5 times median income - worse than London at 8.3 times and New York at 7.2 times. LINK

2 comments:

Uncertain Buyer said...

I think the US flooding the world with cheap dollars had something to do with this. A 1% interest rate is very affordable. This caused a lot of speculators to leverage their investments.

There were a lot of middle class families who helped to bid up the price of housing as well, it wasn't just the rich.

Everyone was in a mania where housing always goes up. Fueled by the RE Industry. Try saying that to some of those foreclosing families in the US right now.

Not a chance, there is no way I could come close to Ben's Blog. This is just a way for me to organize my own thoughts to help me decide when to buy back in to RE.

Anonymous said...

Hi,

Excuse this late post but just a quick explanation of why all Aus cities are overpriced.

1. Media has just keeps ramping up the hype re tax advantages of investment property, day in day out.
2. The tax system is actually very skewed to investor advantage. This cited by the Reserve Bank Australia study in 2003 as the main reason for housing unaffordability. To no ones surprise, the media did not inform the public of this fact when reporting on the RBA findings. To this day, they have not identified investor advantage. For example, last month (Jun2008) the Senate released a report Housing Affordability. Again the main point was that investor advantage is driving prices to unsustainable levels. Again, not a peep from the media.
3. Aus govt has a immigration program that is adding to the population at about 8-9 times the rate of say Sweden.
4. Easy credit and lax lending practices have seen home loans of up to 106 percent offered to Debt Lemmings.

For some balance, a quote from Meher Baba – Don’t worry, be happy.

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