are australian properties overpriced?, page-30

Well, since I have been mauled and branded a liar and property "bear" by the property bulls I might as well share the below which most have probably already read as it's from January 2012.

I should have just used google in the first place :)

Good luck to all.


http://www.abc.net.au/worldtoday/content/2012/s3413319.htm

Aussie cities dominate list of most expensive property

ELEANOR HALL: Australia is again leading the world when it comes to expensive real estate.

An international study of housing affordability puts Australia well behind the United States, Ireland, Canada, Britain and New Zealand.

The only housing market that was more expensive than here, relative to income, is Hong Kong.

Business reporter Michael Janda finds out why.

MICHAEL JANDA: You don't need to tell first home buyers that Australian housing's expensive.

But Demographia's eighth annual housing affordability survey confirms it.

WENDELL COX: The Australian figures tend to be a little bit worse than California which is the worst part of the United States. A little bit worse than the UK and so on.

MICHAEL JANDA: That's the study's co-author, Demographia's Wendell Cox. The median-priced house in Australia's major cities is an average of 6.7 times the median household income.

Only Hong Kong's housing is more expensive at 12.5 times median income while New Zealand is just behind Australia at 6.4.

Within Australia Sydney easily retains first place as the most unaffordable city, with the median house price 9.2 times the median household income. That made Sydney the third least affordable city in the study after Hong Kong and Vancouver but other Australian cities weren't much better.

Wendell Cox again.

WENDELL COX: Followed closely by Melbourne at eight, Adelaide is around I think what six, seven or seven something like that. Brisbane is 6.0 and Perth is down at 5.7 - actually having improved rather significantly in recent years.

MICHAEL JANDA: Real estate analyst Tim Lawless from RPData.com says Demographia's figures may exaggerate the affordability problem slightly but there's no doubt Australian cities are expensive places to buy homes.

TIM LAWLESS: It surely does reflect the fact that we are in a market place that still has some affordability challenges and even though we have seen those price declines, we haven't seen a dramatic improvement in affordability levels.

MICHAEL JANDA: And he says that has resulted in a shift in consumer behaviour.

TIM LAWLESS: There isn't any argument that in areas like Sydney for example, affordability is a real issue and we are seeing more and more people look towards the unit market as opposed to the detached housing in an effort to combat affordability.

MICHAEL JANDA: Wendell Cox lays the blame for soaring home prices squarely on a lack of land release and too much regulation restricting development.

WENDELL COX: It has to do with land use regulation. You have the philosophy of urban consolidation which has drawn strict borders around cities like virtually all of your large capital cities so that it is impossible really to build much on the fringe of the cities. I mean basic economics tells us that any time you create a shortage of anything whether it is land or cars or whatever it happens to be, you are going to drive the prices up.

MICHAEL JANDA: He says the regulations on what land can be developed also fuel property speculation.

WENDELL COX: Investors are not drawn to markets that don't have constraints. I mean there aren't any speculators in Dallas-Fort Worth, or Atlanta, why? Because you can develop land and you know, you'll speculate on land in Dallas-Fort Worth probably after you speculate on sand at the beach.

MICHAEL JANDA: Tim Lawless agrees that land restraints are driving prices up but he says there are other factors that cause Australian prices to be higher than those in the US.

TIM LAWLESS: Geographically we are quite a unique nation. We have virtually 50 per cent of Australia's population is across the three major capital cities for example. We have very tight urban densities in those cities and we have very little opportunities for employment outside the capital cities.

MICHAEL JANDA: There's also the issue of where people want to live. The list of most affordable cities is largely dominated by the US rust-belt, where jobs are hard to come by. The list of least affordable cities is dominated by business, financial and cultural capitals - where work and entertainment are easily accessible.

That could be one reason why Wendell Cox isn't sure the Australian housing bubble will burst.

WENDELL COX: Certainly it has a housing bubble. There is no question that Australian housing is incredibly over-valued by any sort of international standard. Whether it bursts or not, that is beyond my ability to really predict.

ELEANOR HALL: That's Wendell Cox ending that report by Michael Janda. And you can listen to extended versions of Michael's interviews with Wendell Cox and Tim Lawless on The World Today website later this afternoon.