Gary Ablett, Batman, The Economist and The Property Market
Australian property is 25 per cent over valued, The Economist recently concluded. Amongst the 26 property markets it monitored, The Economist concluded that Australia is the second dearest country in which to buy property.
This pessimistic view is probably not shared by The Reserve Bank of Australia, nor many property sector economists.
As Dr Andrew Wilson of The Domain Group pointed out, The Economist’s results would be a more accurate picture of affordability if it had compared incomes to mortgages, rather than house prices.
With 30 per cent of Australian home owners owning a property outright a far more accurate measure of affordability would be comparing incomes to mortgages. And with a low level of mortgage defaults, the property market may well appear robust.
Certainly there is some truth in the research – Sydney’s median price is due to reach $1m by the end of this year. But maybe that’s it; Sydney is our biggest city and maybe it is skewing the results.
The skews could be mathematical, which The Economist argues. But these skews are also likely to impact on perception of the property market country-wide. For example, in the Sydney ABC news bulletin on 2 May 2015, a journalist talked about“soaring property prices across the country.” The chances are that if you lived in Sydney, were looking to buy in Sydney or had friends who were, you would conclude that property everywhere was going gangbusters.
But, nationwide, the truth is very mixed. According to Corelogic’s Housing and Economic Market Update, Sydney is rebounding while the rest of the country is stagnating or going backwards.http://www.corelogic.com.au/resources/pdf/indices/chart-pack/2015-04-02–corelogic-rpdata-housing-economic-chartpack.pdf
Key words that Corelogic used to describe other capital cities were:
- Melbourne Moderating
- Brisbane Underperform
- Adelaide Slowing
- Perth Negative
- Hobart Lost
- Darwin Fallen
- Canberra Flattened
Maybe Sydney is out of sync with the rest of the country just as Batman’s Gotham city is out of whack with middle America.
Last season The Gold Coast Suns started strongly. But, once Gary Ablett sustained a shoulder injury, they fell away badly.
What’s the future for Australian property once you take away the Sydney market?
Leave a Reply
Want to join the discussion?Feel free to contribute!