Housing.
I've been watching all the unfolding housing issues over there on various websites and am wondering when people are going to get the message over here.
Around the time I moved over to Australia I was pleasantly surprised that housing was relatively cheap, it would have been selling for an average of 4 times the annual salary.
A level that has been consistent for most of the last century.
Thing started to go a bit crazy at the turn of the century when the prices started rising abnormally strongly, now, house prices are the worlds most expensive.
Below is an article printed in The Australian in Aug 2005
AFFORDABLE home ownership has slipped further from reach with a US report revealing Australian real estate is the most expensive in the world when adjusted to median household incomes.
Access Economics director Chris Richardson said four Australian cities featured in the world's 10 most expensive, when median house prices were compared with median household income.
The data from United States-based research group Demographia, which was interpreted by Access Economics, found Los Angeles was the most expensive international city, then San Diego and Sydney.
Melbourne ranked eighth on the list, followed by Hobart and Adelaide. Brisbane was the 11th most expensive city.
Australia had the dubious mantle of having the world's most expensive real estate on an adjusted basis, followed by New Zealand.
Mr Richardson said Australia was also the most interest-rate-sensitive nation because of the crisis in housing affordability, and he criticised the Reserve Bank's decision to raise rates by 0.25 per cent in March.
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"It was certainly a mistake, but not a disaster," he said.
The head of property research at Macquarie Bank, Rod Cornish, said any calculation of housing affordability needed to take into account interest rates, but he conceded that Australian cities rated as some of the most expensive in the world.
Mr Cornish said the most accurate measure of house affordability was the percentage of household income used to service a mortgage, which had fallen in several cities in the past year.
The latest estimates from AMP and the Real Estate Institute of Victoria say that the average family would need to devote almost 30 per cent of its income to monthly loan payments to afford an average house in Melbourne. But Melbourne was far from the worst case, with loan payments on an average house eating up 31 per cent of the average family's income in Brisbane, and 36 per cent in Sydney.
Two years after that article and prices are still going up, the music hasn't stopped and they are even more unaffordable now. There will be a blackswan event that will knock the stuffing out of the market here at some point, just like it has done in the US, I can't predict what it will be as it is a blackswan after all an unknown unknown as old Rummy would say.
Regards
Neil
AI
