And now the world knows

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This isn’t new to anyone who reads MacroBusiness regularly. But the rest of the business world has just been enlightened to the fact that all is not well in Australian Real estate with the front page of Bloomberg looking like this today.

Apartment prices in the luxury beachside Australian town of Noosa Heads have tumbled by a fifth since 2008 as cracks emerge in a housing market that’s so far escaped the rout seen in the U.S., U.K. and Ireland.

The median apartment price in the tourism and retiree town 150 kilometers (93 miles) north of Brisbane has slumped 21 percent in three years to A$570,000 ($594,000), according to the Real Estate Institute of Queensland. Sales have more than halved across Queensland state’s Sunshine coast, home to “Crocodile Hunter” Steve Irwin’s Australia Zoo, and the Gold Coast, known for its surfing beaches and casinos.

“We have a very overvalued housing market and even a small adverse shock can be magnified by a large adverse impact on property values,” said Gerard Minack, Sydney-based global developed markets strategist at Morgan Stanley (MS), who asserts Australian home prices are as much as 40 percent overvalued. “We’re seeing that now in parts of Queensland.”

Australia’s housing is the most overvalued in the world, the Economist newspaper said last month. The country had the most unaffordable homes among English-speaking nations, with the Gold Coast and Sunshine Coast markets near the top, according to a Jan. 24 report by Belleville, Illinois-based consulting company Demographia, which compared 325 housing markets in seven developed economies.

The house price index of Australia’s eight capital cities has gained 15 percent since the first quarter of 2008, according to the Australian Bureau of Statistics. Prices gained 16 percent in Sydney and 26 percent in Melbourne.

The usual “vested” get to give some opinion about how it isn’t going to spread and how there is “nothing to see here”. But this isn’t an Australian audience. US and UK based readers have heard it all before and are well aware of what could be coming next. This isn’t a new story, but the fact that it has now reached an international audience on this platform certainly is most interesting.