An IMF spokesman has a crystal ball and says house prices will crash in Australia. Me-thinks he is completely wrong. He says this will happen because houses in Australia are overvalued in relation to income with a large gap between rent and house values.
ANZ representative Paul Braddick says that low rents to average mortgage repayments is not an indication that property is overvalued. House price to income is also not a good guide to what house prices should be. Australians are still buying despite interest rate rises, but interest is still quite low. Obviously people feel their income can cover the cost. Prices are high in Australia due to one very important factor - property is in short supply. Nothing can be done in the short term to correct this. Indeed, tradesmen are holding buyers to ransom making them wait and pushing up labor charges. These factors also increase price.
The availability of land close to centers of employment is tight and supply is virtually fixed. The government is looking to free up land. Not much is out there though. IMF specialists have got it wrong in predicting a slump in Australian house prices. That's a certainty.
ANZ representative Paul Braddick says that low rents to average mortgage repayments is not an indication that property is overvalued. House price to income is also not a good guide to what house prices should be. Australians are still buying despite interest rate rises, but interest is still quite low. Obviously people feel their income can cover the cost. Prices are high in Australia due to one very important factor - property is in short supply. Nothing can be done in the short term to correct this. Indeed, tradesmen are holding buyers to ransom making them wait and pushing up labor charges. These factors also increase price.
The availability of land close to centers of employment is tight and supply is virtually fixed. The government is looking to free up land. Not much is out there though. IMF specialists have got it wrong in predicting a slump in Australian house prices. That's a certainty.
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