Australia’s housing valuation bottoms-out

The ABS on Tuesday released its property price data for the June quarter, which valued Australia’s dwelling stock owned by households at $6.31 trillion, whereas the total housing stock was valued at $6.61 trillion.

As shown below, the total value of Australia’s dwelling stock owned by households was 6.93 times employee incomes as at June, down from the peak of 7.76 times incomes in June 2017, whereas the total housing stock was valued at 7.26 times employee incomes, down from 8.13 times incomes in June 2017:

Similarly, the ratio of the dwelling stock owned by households against Australian GDP was 3.24 times as at June 2019, down from the peak of 3.66 times GDP in the June quarter of 2017, whereas the total housing stock was valued at 3.39 times GDP in the June quarter, down from 3.84 times GDP as at June 2017:

When divided by Australia’s estimated resident population, Australia’s dwelling stock owned by households was worth $248,541 per head of population in the June quarter, down from $272,573 in the June quarter of 2017 in real inflation-adjusted terms:

Thus, after five years of strong growth, Australian housing values retraced significantly against incomes, GDP and population growth.

That said, the June quarter represented the low point given the solid bounce in dwelling values that has occurred over recent months.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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