Earlier this year, RP Data released its Capital Markets Report, which estimated that the total value of Australia’s housing stock was worth $4.54 trillion as at December 2011 – equivalent to 3.15 times Australia’s annual GDP.
RPData has now released its 2012 Capital Markets Winter Report (available for download here), where it has increased the value of Australia’s housing stock by $280 billion:
The residential housing market is Australia’s single largest asset class with a total estimated value of $4.82 trillion as at July 2012. In comparison, the total value of listed domestic equities is three times smaller at $1.23 trillion.
Interestingly, RP Data’s estimate is $777 billion higher than the Reserve Bank of Australia’s (RBA) official estimate, which valued Australia’s housing stock at $4.04 trillion as at June 2012.
Australia’s expenditure-based GDP in the year to June 2012 was $1.47 trillion, meaning that the Australian housing market was 3.28 times the size of the Australian economy, up from 3.15 times in the year to December 2011, according to RP Data. By comparison, the official RBA measure is 2.75 times GDP as at June 2012, down from 2.85 times as at December 2011.
In order to put the sheer size of Australia’s housing market into perspective, the below table compares RP Data’s estimate against other Anglo nations, namely; New Zealand, the United Kingdom, Canada and the United States:
According to RP Data’s valuation, Australia leads the pack with New Zealand close behind. Australia’s housing market relative to the economy is also roughly three times that of the United States.
The above data is consistent with estimates from the International Monetary Fund, which showed that Australians and New Zealanders have a higher proportion of their wealth tied-up in housing (and lower proportion of wealth stored in financial assets) than is the case in other Anglo nations:
As noted last time, with so much of the economy tied-up in housing, let’s hope that the old adage: “you can’t go wrong with bricks and mortar” holds true.
Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.
