Return to Affordability for Australian Housing

According to our most recent Matusik snapshot (Matusik Snapshot 499-House Price update)- Australian housing is becoming quite affordable again falling end prices, coupled with falling interest rates and rising household incomes, have now made housing across Australian – and especially in Queensland, Western Australia, South Australia and Tasmanian-much more affordable.” There are two ways to track valuations: price-to-rent ratio and price price-to-earnings ratio and there are 53% overvalued relative to rental return and 38% overvalued relative to income. In contrast to Matusik's positive viewpoint, the Economist says, “more vulnerable to accredit crunch, higher mortgage rates or a recession which drives up unemployment and could send house price tumbling.

House prices are starting to get the point where people will start buying again. Anyhow, a house price depends on the economy of the country. Australia’s economy grew faster than the last quarter this year on consumer spending especially the mining driven investment and it will have interest rates cuts soon next year. Treasurer Wayne Swan said in a statement, “the strong investment outcomes are further evidence of the massive pipeline of planned investment in Australia.