Where I live in Western Australia, there was a big upward push in housing prices while our State experienced a mining boom and associated growth in population. Now there is a housing boom in the most populous states of New South Wales and Victoria, and it’s causing concern.
There seems to be a disconnect between household income and mortgage costs:
Adam Schwab, company director and angel investor, and the author of Pigs at the Trough: Lessons from Australia’s Decade of Corporate Greed. Published in Crikey, 2019-01-15:
According to the ABS, in 1997/98, the year the housing bubble started growing, equivalised household disposable income was $33,592. In 2015/16, the last year they reported, disposable income had risen to $52,486 — an increase of 56%. While it was very difficult to get a perfect overlay, a Corelogic/Aussie Report showed that median house prices nationally rose from $111,000 to $571,000 since 1993 (a slightly longer period) — an increase of 414%.
Or put it another way: had house prices risen at the same level of income in the last 20 years, the median price across Australia would still be under $200,000.
Now we see reported a decline in housing prices reported. Good for buyers and new market entrants, but not so good for those who may now have negative equity and a mortgage to pay based on bubble prices.
Australia to see world's worst 2019 house price 2019-01-16:
In a research report released on Wednesday, Fitch Ratings forecast Australian house prices would decline a further 5 per cent this year, on top of a 6.7 per cent decline from the peak so far, making Australian housing the worst performer out of 24 countries for the second consecutive year.