10Mar

Sydney and Melbourne Property Overvalued, over loved and over indebted?

My take on Olivers insights! 
Overvaluation is evident in numerous indicators – but is their cause for concern? 
The two basic problems with Australian housing are that it is expensive 
  • According to the 2016 Demographia Housing Affordability Survey the median multiple of house prices in cities over 1 million people to household income is 6.4 times in Australia versus 3.7 in the US and 4.6 in the UK.  In Sydney it’s 12.2 times and Melbourne is 9.7 times.
  • The ratios of house prices to incomes and rents are at the high end of OECD countries and have been since 2003. 
and household debt is high….  however, interest payments on household debt as a % of household disposable income is low (same as 1990) 
  • Real house prices have been above trend since 2003….. but not majorly

  • Home construction is solving the problem of housing shortfall. Completions are solving the underlyiong demand for housing – but is this enough based on projected growth of population through immigration? 
  • Vacancy rates still under 3% – however trend increasing

  • Sydney and Melbourne Property prices – where to? 

It seems as if Housing Price Growth in Sydney and Melbourne will continue in 2016/2017 – but at a lower rate. 
Bottom line…. their is no indication that properties will be coming down soon!!

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