Yesterday, RP Data’s Cameron Kusher tweeted that the value of Australian housing stock had hit round $4.8 trillion at the end of 2012. A quick glance at a PowerPoint presentation released earlier in the year by RP Data also shows that Australia’s housing stock was worth roughly 3.5 times Australia’s total superannuation pool or Australia’s total sharemarket capitalisation (see next slide).
Australia’s total GDP was $1.49 trillion in the year to December 2012, meaning that Australia’s housing stock, according to RP Data, was also nearly 3.3 times the size of the Australian economy.
Interestingly, RP Data’s estimate of the value of Australia’s housing stock is $575 billion higher than the Reserve Bank of Australia’s (RBA) official estimate, which valued Australia’s housing stock at $4.29 trillion as at March 2013, or roughly 2.9 times Australia’s GDP.
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.
Using the RBA’s more conservative estimate, Australian housing values (2.9 times GDP) is behind New Zealand’s and roughly in-line with the UK, but well above the North American nations.
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:
Along with Australia’s banking assets being highly concentrated in the Big Four:
And seemingly mortgaged to the hilt:
One can only hope that the old adage: “you can’t go wrong with bricks and mortar” holds true, as any significant housing correction could disproportionately harm the Australian economy.
