There has been a lot going on lately - shake down and confusion. During these times human emotion works like this - greed is the accelerator and fear is the break. Many people have been jumping from one pedal to other - or applying pressure to both at the same time - not good for the health of the vehicle.
Property Market:
Agents - can you trust them? - Some have been saying that it is still full tilt boogie and business is strong. I think this is an automatic default response. Some agree that the recent stock market melt down has slowed the property market a bit. Many people are just sitting on their hands and waiting for the dust to settle. The big question is will this market meltdown create the same rush to property that happened after the meltdowns in 87 and 2000.
Of course agents are predicting so but there are few indicators that may hinder that outcome - mainly interest rate fears and housing affordability. Yes property usually doubles in Australia every 9 years but there must be some constraints sometime around rental returns and the ability to purchase a house without a corresponding increase in incomes. At present it takes 7 times average annual income to buy an average Australian home - the highest ratio in the world. Can this keep increasing? Can rental returns keep going up to support the increasing costs of investment properties? Stay tuned for the next thrilling installment!
To put Oz house prices in perspective - the only country if a higher median house price than Australia which is $412,000 is the UK at $472,000. Compare it with other similar countries: Spain $369,000, France $293,000, US and Canada $324,000.
