HOUSING affordability is improving but Australia is still the second most expensive country to buy property, according to a survey released on Monday.
The Demographia International Housing Affordability Survey, which looked at 337 markets in seven countries, says Australia’s housing is ”vastly overpriced”.
Only China is more expensive due to the highly competitive Hong Kong market. For major cities, Sydney comes third after Hong Kong and Vancouver.
The report says rising incomes and flat or declining house prices have brought a slight improvement in Australia’s affordability. ”However, each of the five major markets continues to be severely unaffordable, reflecting vastly overpriced housing,” it says.
The senior economist at Australian Property Monitors, Andrew Wilson, criticised the survey, saying that comparing the Australian housing market with others was like making comparisons with Jupiter.
”They are different animals,” he said. ”If Sydney is so unaffordable, why do we have so much activity in the housing market? Why are prices rising?”
Another economist, Angie Zigomanis from BIS Shrapnel, agreed that global comparisons were problematic. ”America has much higher unemployment; prices are different,” he said.
In places such as Detroit, where houses are for sale for $500, there is too much housing since the population has halved. ”People can’t offload their houses for love nor money,” Mr Zigomanis said. Sydney has a growing population and a huge undersupply.
However, Shane Oliver, AMP’s chief economist, said the ”broad message” in the survey was ”roughly right”. He said he was not expecting another boom soon but he was not tipping a crash either.
”We’ve had a price boom up until 2010 but we haven’t had a building boom,” Dr Oliver said. ”Prices might be a bit high but we don’t have an oversupply issue like other places that have gone bust.”
The survey uses a methodology called the ”median multiple”, which is the median house price divided by gross before tax annual median household income. A rating of more than 5.1 is considered ”severely unaffordable”. Australia scores 5.6 while Sydney scores 8.3, Melbourne 7.5; Adelaide 6.5, Perth 5.9 and Brisbane 5.8.
Interest rate cuts fail to lift housing market -BusinessDay
The original release of this article first appeared on the website of Hangzhou Night Net.