It’s official: Australia’s house prices the highest in the world!

Spaghetti: How am I supposed to eat it, when I can't even spell it?
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Congratulations Citizens!

The Economist says your home is the most expensive among the advanced countries we generally compare ourselves with.

Before you puff out your chest in pride, consider what this means.

Mortgage repayments are the heaviest in the world, leaving the least disposable income for food, clothing and transport.

This is a very serous problem.  Someone buying a home at nine times their earnings with a 20 per cent deposit faces principal repayments (not interest, that is extra) of 24 per cent of gross pre-tax income for thirty years. Ouch.

While no one can exactly predict the timing, the risk of price falls are the greatest in Australia and likely largest in size when we run out of ‘greater fools’ to play musical chairs with and sell to.

With the Reserve Bank stepping up interest rates in measured and determined steps, this can only be a matter of time.

The Economist index compares house prices to rents, or if you like, to their earning potential. By this measure, Aussie houses are 56.1 per cent overvalued.

Were prices to correct to long term averages, median Melbourne house prices would slump from $524,500 to around $330,000.

According to the HIA, recent house price rises are solely due to the rising price of land, up 14 per cent, while materials rose only 1% and labor fell slightly.

The HIA are no heroes.  Behind the scenes, they are delighted their constituency – the land-banking developers – are peeling thousands off naive first home buyers by limiting land supply.

Our failure to impose a Land Tax – an automatic stabilizer – to slow price rises makes Australia acutely susceptible to land bubbles, despite us having more land than everybody except the Antarcticans.

We need to stiffen the backbone of our parliamentarians and bureaucrats, to make the necessary changes.

Sign the petition!

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https://prosper.org.au/2010/04/20/its-official-australias-house-prices-the-highest-in-the-world/