From Adam Carr at BS:
It’s been confirmed! Far from slowing, the property market is accelerating, and that’s despite the considerable jawboning efforts of the Reserve Bank of Australia.
…Now, while it’s probably true to say that there is a sizeable difference in performance between the major capital cities, it’s not all that helpful to obsess about that. As chart 1 shows, total returns, outside of Canberra perhaps, are very attractive relative to the cost of debt. I mean you can borrow at less than 5%, and while property prices in, say Perth, may not be going gangbusters – down 0.1% in the month and only 3.4% higher annually – your total return (which includes rent) is still nearly 3% above what you pay to borrow. That’s the benefit of a 4.2% rental yield. You can’t even get that on a bank deposit!
