2019-12-01_Australian_House_Garden

H Gadvice

196 | AUSTRALIAN HOUSE&GARDEN

T

hemedianpriceofa housein

Sydneyisabout$1million– and

thatwillbuyyoua modesthome

inanoutersuburb.Forthesamemoney,

youcouldbuya rusticbutrenovated

farmhouseon2hawitha poolandsea

viewinItaly,a grandmanorhouseon

12 hainFrance,orperhapsevenan 18 th

centuryBaroquecastleinRomania.

SoisAustraliathemostexpensive

countryintheworldtobuya home?

Accordingtoinvestmentbank

MorganStanley,HongKongisthe

world’smostexpensivecitybutSydney

andMelbournearenotfarbehindin

secondandfifthplace.Adelaidecomes

in 16 th,Brisbaneat 18 thandPerthis

21 st.NewYorklagsin 23 rdplace(and

mortgagepaymentsaretaxdeductible

intheUS,makingit evencheaper).The

bankbasesitsanalysisona comparison

ofpropertypricesandincome.

Housingthink-tankDemographia

ranksAustraliaasthethirdmost

unaffordablemarketafterHongKong

andNewZealandinitsannualsurvey

of 309 metropolitanareasineight

advancedeconomies.AllAustralian

citieswithmorethan1 millionpeople

arerated“severelyunaffordable”.

Inaddition,thehouseholddebt

toGDPratioinAustraliaissecond

onlytoSwitzerlandandthecostof

borrowingtobuya hometendstobe

moreexpensivethaninotherstrong

real-estatemarketssuchastheUS,

CanadaandHongKong.InJapan,

Switzerland,FinlandandGermanyfixed

mortgageratesarelessthan2 percent.

Overallcostoflivingisimproving,

however.Sydneyhasfallento 16 thplace

(-6)inThe EconomistIntelligence Unit’s

WorldwideCostofLiving 2019 survey.

Melbournehasdroppedto 22 nd(-8);

Brisbaneis 41 st(-15), Adelaide 51 st(-21)

andPerth 64 th(-18). Despitethis,both

SydneyandMelbourneremainamong

themostexpensivecitiestoliveinthe

AsiaPacificregionatsixth and eighth

placesrespectively.

Conventionalwisdomhasit that

highhomepricesinAustraliaarethe

resultofa shortageofsupply.This

assumptionischallengedbyANU

academicsAssociateProfessorBen

PhillipsandresearcherCukkooJoseph,

whoconcludedthatAustraliainfacthas

anoversupplyofhousing,sofactors

otherthansupplymustbeexaminedto

explainhousepricegrowth.Theyalso

foundthatunitdevelopmenthasledto

theoversupplybeingconcentrated in

theinnersuburbsofBrisbane,

MelbourneandSydney.

“Thereisa rangeofpotentialdrivers

forhousepricegrowth,”sayJosephand

ProfessorPhillips.“Theseinclude

investorsreceivingtaxbenefits– such

asthecombinedimpactofnegative

gearinganddiscountedcapitalgains

taxarrangements– lowinterestrates,

populationgrowth,periodsofhousing

undersupply,foreigninvestmentand

exclusionofthefamilyhomefrom

pension assets testing.”#

it’sofficial:australiais oneofthemostexpensiveplaces

in the world to buy a home, writesHarvey Grennan.

HIGH TIMES

Stuckinthemiddle

AccordingtotheOECD,Australiadoesnot

ratesobadlyafterall.Itscomparisonof

housepricestoincomeratiosplacesCanada,

PortugalandSloveniaasthemostexpensive

countriesandAustraliainthemiddleofthe

packat 16 th.Indollarterms,however,

Australia is still right up there.

Property

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