Jessica Irvine of the Sydney Morning Herald says there is no housing bubble.
Less sophisticated bubblers simply compare the rise in house prices over the past few decades to the rise in wages to make the ''overvalued'' claim, pointing out that the former vastly outperforms the latter.OK, but what happens when it's time to sell? $402 will get you this in a distant Sydney 'burb.
But this overlooks the historic boost to household borrowing capacity that occurred in the 1990s with the halving of nominal interest rates. This, in effect, doubled the amount households were able to borrow against a certain income. The relaxation of lending standards by banks in response to financial deregulation also increased the amount banks were willing to lend against that income. These two factors are largely responsible for the increase in household debt between the mid-1990s and 2000s.
Irvine writes,
Most of the population is concentrated in a few capital cities with often marvellous water views.This is the marvelous view from that $402k house. A nice view of graffiti and clotheslines.
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Think of your budget and what you are looking for in a house and do the math (h/t iamfacinganap for spotting this property).
10 comments:
Based on the size of the house, the 'hood and the distance to downtown, a comparable house in Texas might go for $100k. But the weather in Oz is much better, so that must account for the 4x price. That, and there is a shortage of land down under.
You know what destroyed housing?
Capitalism.
Just like it destroyed the Martians.
JVJ
Speaking of housing, how's that prosecution of Boi Blunder and his illiterate sidekick parents coming along?
Sorry Lou, but mark my words, that's one of your 2011 predictions that will be dead wrong. California is fucked.
A shortage of land? With 7 inhabitants per square mile?
Sarcasm.
"You can't make a man understand something when his income depends on him not understanding it."
Keep in mind that most of Australia is not very habitable, unless you like deserts with no water and a variety of wildlife that makes the list of the world's most dangerous.
I've been to Sydney - that's one beautiful place.
Lou, Australian's by and large aren't insane, as evidence by last weekends election.
However, the housing market in Australia IS insane.
My son took out a $300,000 mortgage on a small 3 bedroom house in a suburb that is closer to the Blue Mountains than it is to his workplace in Sydney.
Add to that we have the 5th most expensive parking in Sydney
http://www.dailytelegraph.com.au/news/sydney-nsw/a-day-just-to-park-a-car/story-e6freuzi-1225997073876, and you get an idea of how greedy the local councils etc are.
Lordy, past Blacktown for $A 400k! (Which I note is now more than $US 400k given the way the US dollar has been crashing, unremarked by the American media.)
Things sure have changed since I lived there. That pile of money would have bought you a rundown place, but a rundown place within 3 miles of downtown, back when I lived there and thought prices were too bloody high! Shows what I know (knew).
And yes, Sydney is one beautiful place, but I can't quite say the same about Blacktown.
I don`t think that Australians are insane.
Anyway i can tell you that Sydney is a great city.
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