House prices jump 20pc

[MikeW]

Extract from:

 

House prices jump 20pc - ABC News (Australian Broadcasting Corporation)

 

House prices have surged by 20 per cent this year, giving the Reserve Bank board more reason to lift interest rates when it meets tomorrow.

 

Figures from the Bureau of Statistics show a rise of almost 5 per cent for the quarter, and 20 per cent for the year.

 

It is the largest annual increase since the series began in the March quarter of 2002.

 

Melbourne led gains with quarterly prices rising 6.7 per cent and annual prices up 27.7 per cent.

 

The strongest growth came from established houses with relatively high prices.

 

Over the quarter the other capitals also experienced positive contributions: Sydney up 5.3 per cent, Perth 3.5 per cent, Brisbane 2 per cent, Adelaide 2.7 per cent, Canberra 5.4 per cent, Hobart 4.2 per cent and Darwin 3.6 per cent.

 

Annually, house prices rose in Melbourne 27.7 per cent, Sydney 21 per cent, Canberra 20.6 per cent, Darwin 17.5 per cent, Perth 15 per cent, Hobart 14.1 per cent, Brisbane 12.1 per cent and Adelaide 10.8 per cent.

[Guest chris955]

When you consider they are already unaffordable for many it is very unwelcome news.

[spottydog]

In my area median prices have risen significantly this year but house prices haven't risen any where near as much. The big difference for my area is that last year first home buyer 2 bed houses were the main ones on the market and selling whereas this year its 3 and 4 bed houses which cost significantly more.

[Guest gratom]

This sounds like a classic definition of a bubble---hope it deflates gently and not with a bang

[Guest roantreemj]

Just a bit of food for thought for those of you worried about property prices ,values etc.

These are a few of the predictions I made some time ago and now being spoke about by some of the leading economists across the country.

 

 

According to The Economist, Australian housing is now 56.1% overvalued based on the long run average of price to rent ratios. The price to rent ratio is seen as similar to that of the PE (price/earnings) ratio used to value shares.

Australia is in 1st position on the leader board of overpriced property. In close 2nd is Spain at 53.4%, Hong Kong at 49.1%, France 39.7%, and Sweden 37%.

 

According to Edward Chancellor, author of the book titled Crunch Time for Credit (2005) and a member of US Investment Firm GMO’s asset allocation team, Australia is in the midst of an unsustainable housing bubble that could burst at any time.

It’s hard to argue with these claims when reports out today show Australian house prices have surged 20 percent this year, the most since the ABS started the house price series in 2002. Melbourne recorded an unsustainable gain of 27.7 percent followed by Sydney at 21.0 percent. This comes after reports in February that wage growth fell to it’s slowest pace in a decade last year.

M Chancellor told The Australian, he estimates Australian house prices are more than 50 percent above their fair value, something he cites as a once in a 40 year event. “If house prices were to revert to their historic long-term average (ratio of average price to average income) they would fall quite considerably.”

 

for more detailed info and graphs go to www.whocrashedtheeconomy.com