Australian Property

Australian property is one the widest and deepest asset bubbles in the history of capitalism. Any objective assessment of this “market” can lead to no other conclusion.

With a long history of commitment to home ownership, Australians have always been prepared to structure their finances around property. This showed up in a total dwelling stock to GDP ratio that persisted around a very high 150% from 1960 to 1990. In the late 1990s that shot up to 200% and then embarked on near ceaseless climb to 360% today.

There are many other guides to the extreme overvaluation of Australian property. The ratio of household debt (overwhelmingly mortgages) to disposable income is the highest in the world at 186%. Median price to income multiples are anything from 12x in Sydney, to 10x in Melbourne, down to still immensely unaffordable 6x in smaller capitals, up from 3-4x times in all over the long run for all. The extent of overvaluation is plain.

What makes the Australian property bubble unique is the degree to which it has warped the nation’s political economy. Once a diverse and vibrant resources and manufacturing economy, over the twenty years that the Australian housing bubble grew that shape changed completely. An huge proportion of the debt underpinning Australian property is borrowed from offshore, almost $1 trillion, mostly by its big four major banks. This perpetually inflated the local currency, as well as input costs like land prices, which dramatically diminished Australian competitiveness and drove tradable sectors like manufacturing offshore. From 14% of output in the 1970s, manufacturing hit 5% of output in 2016, the lowest in the OECD.

Moreover, the centrality of Australia property to the wealth of the national polity increasingly distorted policy and even elections. In the 2008 global financial crisis, the then Labor government bailed out the the big four banks with guarantees to their offshore loans, rewriting the entire rule book for Australia’s financial architecture in one panicked afternoon. Public subsidies poured into demand-side stimulus, as well as RMBS markets. Any notion that Australian property was a “market” evaporated. Australian property was, and remains, a kind of asset quango, a public/private partnership in support of the retirement plans of its pre-dominant Baby Boomer generation.

MacroBusiness cover all elements of Australian property daily.

These guarantees exist to this day and reached their peak distortion to the political economy in 2016 when the ruling Liberal/National Party Coalition government fought and won an election in the singular defense of “negative gearing”, the principal tax policy most responsible for investor’s favouring property over other asset classes.

Contemporary Australia does not just have a property bubble, it has morphed into Propertocracy in which the primacy of house prices determines who leads the country, what policies are chosen and which generations prosper.


Australian property market August 2021 update

August 2021 Australian property market affordability update Australian property market prices continued to climb over the last month, with the past six months seeing some of the strongest growth on record. Mortgage fixed interest rates were steady, standard variable rates fell slightly but remain significantly above fixed rates.  There are some extraordinary divergences in affordability.


Auction market bounces into spring

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Australia’s nuclear fallout

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CoreLogic weekly house price update: Same ole, same ole

In the week ended 16 September, the CoreLogic daily dwelling values index increased another 0.34%: All major markets recorded rising values. Note, Perth’s daily index has been suspended while CoreLogic investigates anomalies: Values have so far risen by 0.74% this month, with all major markets rising: Quarterly price growth remains turbo-charged but slowing at 4.82%


Property listings collapse from coast-to-coast

The PropTrack Listings Report for September has been released, which assesses listings on The latest report reveals that property listings continue to fall across both capital cities and regional areas: Right across Australia property listings have collapsed, down 23.9% nationally year-on-year. The only notable exception is Melbourne, which was in hard lockdown this time


RBA passes housing affordability baton back to government

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Australia goes nuclear

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NSW planning minister shreds fake affordability inquiry

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Australia: the land of easy mortgage credit

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Treasury: Mass immigration wrecked housing affordability

Yesterday, the Australian Treasury’s Macroeconomic Division head Crystal Ossolinski told the parliamentary committee into housing affordability that housing supply had not kept pace with rapid population growth in the early 2000s, which caused house prices to surge: “We’ve had some periods of strong population growth in Australia, particularly in the early 2000s, where population growth


Rental vacancies shrink to decade low

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Aussie housing towers over economy

The ABS yesterday released its property price data for the June quarter, which valued Australia’s dwelling stock owned by households at $8.5 trillion, whereas the total housing stock was valued at $8.9 trillion. As shown below, the ratio of the dwelling stock owned by households against Australian GDP hit a record 4.1 times as at


Australia’s property market tightening amid lockdowns

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ABS: Property prices surged 6.7% in June quarter

The Australian Bureau of Statistics (ABS) today released its property price indices for the June quarter, which registered explosive 6.7% growth across the combined capitals over the quarter and 16.8% growth year-on-year: The gains were broad-based with all capitals recording strong price growth over the quarter and year. The next table tracks price growth over


Coalition sheds more housing affordability crocodile tears

Coalition MP Jason Falinski, who will chair the parliamentary inquiry into Housing Affordability and Supply, penned an article in The AFR lamenting the destruction of housing affordability across Australia and the need to boost housing supply: The Tax and Revenue Committee’s inquiry is our last and best chance to understand why in 1985, growth in


Auction market bounces back

The nation’s auction clearance rate rebounded further over the weekend, recording a preliminary national clearance rate of 72.3%, up from the prior weekend’s 63.7%. Sydney’s preliminary clearance rate remained rock solid at 83.8% versus 84.0% the prior weekend, whereas Melbourne’s rebounded to 54.4% from 44.5% the prior weekend, but remained weak: According to CoreLogic regarding


Melbourne’s auction market retreats into cave

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Aussie mortgage rates continue to push lower

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MB submission to housing affordability inquiry

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CoreLogic weekly house price update: slowing

In the week ended 9 September, the CoreLogic daily dwelling values index increased another 0.28%: All major markets recorded rising values. Note, Perth’s daily index has been suspended while CoreLogic investigates anomalies: Quarterly price growth remains turbo-charged but slowing at 4.94% across the five major capitals. Sydney (6.26%) continues to lead the way, followed by


Property Council: Affordability in danger as approvals fall

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Housing supply… another fake inquiry

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