Moody’s Analytics (not to be confused with Moody’s Investors Service, the credit ratings agency) released a new report in the past few days arguing that Australian housing is “fairly valued as the long-run drivers of house prices—rents, incomes and interest rates—are supportive of current prices”. Let’s take a look.
Why is Sydney so expensive? First, house prices in Australia are high compared with the rest of the world’s because of the rela- tively strong economy, helped initially by the mining and commodity boom, although commodity prices have cooled in 2014; a tax and subsidy regime that encourages investment in property, and low interest rates. Incomes in Sydney are higher than those in the rest of the country…
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
