Will Aussies turn to property in a share market slump? If they do, it will be hard to find anything cheap in the Australian housing market. “Australia (with New Zealand) has the most unaffordable housing [market] in the surveyed nations,” economist Wendell Cox concluded in a recent report on global housing markets.
The collapse of the housing market in the States as exposed the vulnerable balance sheets of many Americans. They are debt rich and asset poor. You can talk favorable demographics all you like. But the fundamental question for any housing decision is whether a borrower can make his mortgage payment. That’s getting to be an expensive proposition here in Australia.
There hasn’t been a house price crash here, like the ones unfolding in America and Britain. But affordability in the Australian housing market is clearly a problem. Of 227 cities surveyed, Cox found 18 Australian cities in the top 50 of “least affordable” in the world. “There are no affordable [housing] markets in Australia and there are no moderately unaffordable markets. Twenty-five of the 28 markets are rated severely unaffordable.”
“All of the large capital cities (Sydney, Perth, Melbourne, Brisbane and Adelaide) are rated severely unaffordable. The best ratings are seriously unaffordable in three smaller markets, Maitland (NSW), Ballarat and Bendigo (both in Victoria).”
If the Reserve Bank puts up rates again… watch out.
The Daily Reckoning Australia