There is no underlying systematic model of Australian house prices. Each housing cycle is different in its depth, breadth, duration and composition.
Australian capital housing markets performances however reflect an overall consistent trend but differ in intensity according to local supply and demand factors.
The underlying consistency of capital city housing cycles reflects the overarching influence of national monetary and fiscal policy settings – interest rate settings and government spending.
The nature of capital city housing cycles essentially reflects the nature of the local, national and international business cycle.
Australian house price growth typically follows the growth in incomes over the medium to longer-term.
Analysis consistently reveals that the proportion of average disposable income required to finance the average home loan has remained relatively stable for decades. And this can be no surprise given the rigidity and risk aversion of Australia’s mortgage lending environment.
Incomes growth is directly determined by the local demand for labour which is determined by the performance of local economies.
High demand for labour encourages wage rises that facilitate an increased capacity for home purchases. High demand for labour also encourages immigration that increases demand for housing.
It is no coincidence that the capital cities with the lower relative unemployment rates have higher incomes and higher house price growth.
The capacity of local economies to generate jobs is therefore a key element in the outlook for house prices growth.
The medium-term outlook for the Australian economy remains mixed with the resources states of Western Australia and Queensland to be continued beneficiaries of high international demand for minerals and primary products with economic growth to be exacerbated by a lower currency.
Other states are set to remain subdued overall particularly with the continued decline of the manufacturing base in Victoria and to a lesser degree New South Wales. Living standards can be expected to moderate through long-term economic adjustment which will impact on employment levels and incomes growth
Medium term demand for labour in Perth and Brisbane can be expected to increase and remain relatively strong with incomes growth to average 4 percent annually. This will equate to average house price growth of 6 percent per annum.
Prices growth in Sydney will average 5 percent per annum underpinned by housing shortages and despite lower levels of incomes growth. Similarly lower incomes growth through underperforming local economies will impact on the other major capitals with Melbourne to average 4 percent and Adelaide 3 percent annual house price growth.
Thanks Shaddow. These charts make me feel so good that I'm well out off it all.
The charts I'm interested most in these days are rainfall charts
Edit...... But weren't the bulls arguing last year that the ratio was only about 5:1 when bears were complaining it should be about 3.5:1 to 4:1?
c.9:1 hey, you really need to be hoping for your investment to continue to appreciate at phenomenal levels to take the risk of infesting in Australian houses.
the house prices are pumped up with low interest rate ponzie system money of banks leveraged 40to1 and relying on the derivatives market for their profits that are marked to model not to market ,most of them interest rate swaps and when interest rates rise then everyone better take cover from the fallout as it will be big the turning point in the real estate and business cycle is october 2015 world wide and the cycle turns down for 18 years and this is what governments and central banks are trying to go against the cycle with low interest rates and money printing and they will eventually loose the battle .We are just sheep being herded into asset classes especially real estate as the game is fixed in favour of tax revenue and regulation set up by government . real estate is pure speculation only !!!!!!!!!!!
the house prices are pumped up with low interest rate ponzie system money of banks leveraged 40to1 and relying on the derivatives market for their profits that are marked to model not to market ,most of them interest rate swaps and when interest rates rise then everyone better take cover from the fallout as it will be big the turning point in the real estate and business cycle is october 2015 world wide and the cycle turns down for 18 years and this is what governments and central banks are trying to go against the cycle with low interest rates and money printing and they will eventually loose the battle .We are just sheep being herded into asset classes especially real estate as the game is fixed in favour of tax revenue and regulation set up by government . real estate is pure speculation only !!!!!!!!!!!
Really? What happens on October 2015???
For Aussie property bears, "denial", is not just a long river in North Africa.....
You get your eviction notice dummy and find out the real meaning of shanty. Your new restaurant becomes the local shire dump and you save up for a year to be able to post the words "im sorry i was wrong" on this forum. Other than that, nothing.
You get your eviction notice dummy and find out the real meaning of shanty. Your new restaurant becomes the local shire dump and you save up for a year to be able to post the words "im sorry i was wrong" on this forum. Other than that, nothing.
oh I see you have finally remembered your password
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
As part of our household surveys we have been examining the state of play for NSW first time buyers since 2002. In our research we have identified the year in which they purchased, whether they subsequently refinanced, or moved on, and how many of these households are currently having difficulty in finding a lender to refinance with. To be clear, this is a snapshot, as at August 2014, across multiple cohorts.
The data shows, firstly the monthly volume of loans written for first time buyers, peaking in 2009, and now languishing at a 20 year low. Next we plot, by age of the purchase, what proportion of households have subsequently either refinanced an existing loan, or sold and bought elsewhere. Perhaps it is not surprising that loans which are older, are more likely to be churned. The yellow trend line shows the proportion of households, by year of origination who have tried, but have not so far been able to refinance their loan. We see a significant peak in loans written in the 2009 boom time (when first time buyer incentives were at their peak, both at a federal and state level in a response to the GFC). More recent loans are less likely to be churned, so we see the drop in recent month. This suggests that there are a number of households in the 2009 and 2010 cohort who are in some strife.
We also analysed data on their current levels of mortgage stress, and their loan to income (LTI) ratios. We found that the average LTI grew steadily through the 2007-2012 cohorts, and currently stands at close to 6 times current gross income. We also see a peak in mortgage stress, in those households who took a loan in the 2009-2012 period. The proportion in mortgage stress are lower in the cohorts before and after this period. Once again the data highlights potential issues in specific cohorts, who are highly sensitive to unemployment, falling income or rising rates.
This data also is a warning, that first time buyer incentives can pull households into the market, and lay potential long term problems for them.
The entire Australian economy is solely based on our house prices!
The price of iron ore has crashed, which was a solid income earner for our government.
Australians are literally infatuated with house values as it is the ONLY asset class that we hold and cherish.
It is this attitude that will bring this country to it’s knees and experience a severe recession.
I pray that it will only be a 20% correction, but any higher and we will look like California as they were in 2010!
It is quite a shame that the RBA and the government has allowed our housing market to enter severe bubble territory
Why have they allowed this to happen when they are fully aware of the dire consequences?
How silly? the entire economy is not housing at all. Housing is most people's biggest spend so it has been and always will be a major part of any economy, there is nothing untoward about that whatsoever.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
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