property values v income in usa, page-2

http://www.demographia.com/dhi.pdf
International Housing Affordability Survey



This graph does not show the peak of the boom for Brisbane (and other capitals) Brisbane had another 20% growth in house prices up to March 2008. The graph shows that property prices measured in terms of average income are very expensive relative to the world 6.5 - 8.5 times average income. If the UK and US are considered overpriced on multiples of 3.5 - 5 times income then look out Australia...

We are very vulnerable as unemployment rises. Australian property prices are just beginning to fold. Unemployment and house prices are negatively correlated. History tells us that as unemployment rises house prices fall.

You will find all the information you need in the above report to convince you we have experienced an almighty international bubble, driven by the creation of money (credit) and it is now deflating.

History also tells us that when credit is withdrawn house prices fall. Price falls continue overseas. The US leads having peaked in late 2006, the UK followed peaking in August 2007. We are very fortunate to have overseas markets as early warning systems. Brisbane peaked in March 2008

As house prices fall the vacuousness of commentators parroting on about "underlying demand" supporting prices disappears as it has in the US and the UK


US prices peaked -

Mid-End 2006 (25% fall - on average - to October 2008 and still falling. Much worse falls in certain states/ cities)

UK prices peaked -

August 2007 (19% fall in past 12 months to December)

Australian (Brisbane) prices peaked -

March-April 2008 (4% fall in Brisbane prices to September 2008. Just 5 months from March 2008 peak. Not a panic yet but its early days and keen sellers (not the bulls) are creating new market prices.

In Brisbane the peak of the last (relatively small property boom) after 1987 stock market crash was in 1992/93. It was 10 years (2002) before prices returned to their 1992 peak.

Between 2001 and 2008 Brisbane property prices increased by 168%!! That’s an average of about 24% per year – both unprecedented and unsustainable. Its over...