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Australian homes the worlds least affordable!

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http://www.news.com.au/business/story/0,23636,23081706-462,00.html
Quote:
Australian homes the world's least affordable, survey says


Global survey damning of Australian home affordability
Mandurah and Sunshine Coast least affordable in Oz
Los Angeles the least affordable city on Earth

AUSTRALIAN homes are the least affordable in the world, with regional cities including Mandurah outside Perth and Queensland's Sunshine Coast emerging as among the most expensive.

A survey of 227 cities published in the 2008 Demographia study of international housing affordability suggests the Rudd Government should not focus exclusively on Sydney, Melbourne and Brisbane.

The least affordable cities in Australia are Mandurah, a commuter town 74km south of Perth, which is ranked 6th in a list of the world's least affordable cities, and the Sunshine Coast, a favourite holiday destination of Kevin Rudd, which is ranked 7th.

Sydney is ranked the 11th least affordable city in the international survey.

The least affordable place to live in the world is Los Angeles, but because Australia has the most cities - 18 - in the top 50, it is the least affordable nation for housing.

"Australia (with New Zealand) has the most unaffordable housing in the surveyed nations," economist and report author Wendell Cox said.

"There are no affordable markets in Australia and there are no moderately unaffordable markets. Twenty-five of the 28markets are rated severely unaffordable.

"All of the large capital cities (Sydney, Perth, Melbourne, Brisbane and Adelaide) are rated severely unaffordable. The best ratings are seriously unaffordable in three smaller markets, Maitland (NSW), Ballarat and Bendigo (both in Victoria)."

Perth, ranked 19th, is almost on a par with London, which is the 18th least affordable city.

The 24th least affordable is another West Australian city, Rockingham, a holiday destination 47km south of Perth.

"It's not just the big cities. This study confirms that affordability is also a problem in areas including Mandurah, the Sunshine Coast and the Gold Coast," Property Council of Australia chief executive Peter Verwer said. "It's important with these new cities that we don't make the same mistakes, which is put a ring around and them and say: no more development beyond here. That just makes prices rise.

"Australia's dismal performance highlights the need to reverse the policies that created today's artificially inflated house prices.

"On average, Australian families are forced to spend 6.1 times their entire household income to buy a typical home compared to 3.1 times in Canada and 3.6times in the US, and that's before interest charges.

"In Sydney, the multiple is 8.6 and Melbourne is 7.3, but it's even higher in some of Australia's fastest-growing cities, including Mandurah, (9.5), Sunshine Coast (9.3) and the Gold Coast (8.6)."
The expression on your avatar's face says it all!

Does this mean that prices can only drop?
It's slightly unbalanced in some of the assumtions there all.

Mandurah is a ncie place to live and with the resoucres boom, well paid mine workers can live there and pay extra for the privilage.

Sunshine coast is full of NSW and QLD retirees, who have sold up in NSW or VIC and gone, wow this is cheap and they have overpriced the market.

And then there is Maitland, Bendigo, and Ballarat which are now becoming commuter towns for Sydeny and Melbourne workers. So again, unfair inflation due to external forces on the market - ie wages of the area differ from the purchasers incomes.

Sure our general houses might be more expensive to build, but hey, we all expect a good lifestyle inthe country, should the building game expect any different?
My thoughts.
Steve
They're ridiculously overpriced imo. Just look at the cost-to-earnings muliples and that tells the story. And not only Aust v the rest of the world, but Aust now versus Australia 40 years ago.

As many babyboomers gloat over their real estate windfalls (I know plenty) as if it's due to some cleverness on their part, I don't know many who have wondered who pays for their sack of cash. Of course it's the suckers in the next generation trying to buy a house for the first time.

Trouble is that no government is ever going to do anything drastic to change the situation. Imagine if, suddenly, a set of policies made houses about 25% cheaper. Some first home buyers are going to be happy, but very recent first-time buyers are going to be ready to burn down the town hall as they swallow a huge burden of negative equity as their house value plummets.

The false (national) wealth created by real estate inflation and speculation can't be stopped short of a depression. No government is going to deliberately engineer that.

The only way out is a very gradual and gentle solution, but no one even seems to know how to achieve that modest outcome.
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