Australian homes are the most expensive in the English-speaking world
Whereas other housing markets – most notably Ireland, the United States, and the United Kingdom – have crashed and burned in the wake of the global financial crisis, Australia’s housing market has remained steadfast, so far avoiding the painful corrections experienced elsewhere.
Included in the report is a cross-country comparison of total housing assets against gross domestic product – a simple but effective measure of Australian housing valuations across time and relative to other English-speaking nations.
Finally, the report also breaks down rental returns relative to mortgage and term deposit rates in order to gauge the attractiveness of residential property investment for both the geared and un-geared investor.
Therefore, the average dwelling purchased over this period by an investor using finance (rather than savings) has been negatively geared, meaning that the investor has essentially been paying their dwelling a dividend in the hope that the dwelling repays them with some capital growth.
Thus the report shows that the investment fundamentals currently do not stack-up for Australian housing unless there is strong capital growth – a questionable prospect in the current economic environment.
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