property market


PHOTO: Australia

But according to AMP Capital chief economist Shane Oliver, the real picture isn’t so black and white.

“The Australian housing market remains far more complicated than optimists and doomsters portray it to be,” he said in a note.

“Yes, it’s expensive and heavily indebted but talk of mortgage stress is overstated and it’s been undersupplied.

“The combination of rate cuts, the election and a modest regulatory relaxation have helped turn property prices back up, but the upswing is likely to be constrained.”

Here are the hard-and-fast straight facts you need to know about the Australian property market:

1. It’s expensive

Even though the property market is currently recovering from bottoming out over the last two years, it’s remained expensive since early last decade, Oliver said.

“According to the 2019 Demographia Housing Affordability Survey, the median multiple of house prices to income is 5.7 times in Australia, versus 3.5 in the US and 4.8 in the UK,” he said.

“In Sydney it’s 11.7 times and [in] Melbourne is 9.7 times. The ratios of house prices to incomes and rents relative to their long-term averages are at the high end of OECD countries.

“The surge in prices relative to incomes has seen household debt relative to household income rise from the low end of OECD countries 25 years ago to the high end now.”