To me it seems like a giant house of cards, waiting for the just little breeze to bring it toppling down. And I am not speaking from a point of chagrin here - I own my own home and am glad that it is valued at what it is now, but I also know that it is crazy, and really, should housing prices be going up at something like $100,000 per year?? Because that is what is happening here...
Oh no wait, "Australia is different". Lol.
[1] https://static1.squarespace.com/static/524e8cb8e4b0bd80688f4...
[2] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/...
[3] http://www.whocrashedtheeconomy.com/graphs/housepricetoincom...
[4] http://www.whocrashedtheeconomy.com/graphs/DwellingsUnderCon...
[5] https://edge.alluremedia.com.au/uploads/businessinsider/2017...
[6] https://2.bp.blogspot.com/-R8UWx7QRj-c/WNoXKoRaeMI/AAAAAAAAi...
If I want to build a decent nest-egg it's likely going to require spending a considerable amount of time overseas. That said, healthcare and affordable education is pretty cool.
But I don't own a house because I don't see value in them at current prices.
What's got me curious is the amount of foreign investment in Australian property. Are they so keen because our market looks like value to them, or just because some spruiker showed them a graph of house prices over the last 20 years.
It's especially good to say "housing bubble" because it sounds smart as a market analysis from someone who has a lot of data, and it can only be proven wrong years later (when the comment is long gone) when the bubble is not burst, proving the new housing prices just reflect your neighbors' average wealth. "but the bubble is around the corner", they'll still say. Every city in the world.
Housing prices grow according to people's wealth; there are also more and more people in every city, that increases the pressure on prices and it's rarely a bubble.
Lots of global cities do have bubbles from foreign investment parking wealth in property, driving up prices and squeezing out locals looking to buy. Here's how it works:
Foreign investors buy luxury properties
Top-tier locals can't buy luxury properties, buy the next highest property class
Second-tier etc.
Lower-rung locals have no properties to buy. Not: they don't have enough money; but the property type they would traditionally occupy isn't available, and no alternatives have been built since it's always in a developer's best interest to aim at the top, in the abscesses of government incentives.
What you describe doesn't sound like a bubble to me: It's not something that blows then bursts. That's just that foreigners are richer than locals.
What might be happening (I think, seen no evidence yet) is that asset managers in banking have moved "safe" money from treasury debt to real estate, because return from treasury debt has moved to close to 0 since 2008. The result is billions of dollars have moved into real estate across the world, fueling what seems to be an increasingly global real estate crisis.
Usually this happens when interest rates go up, because then it's better to keep your wealth in a more liquid investment like cash. Mortgage payments go up as well, turning the (imaginary) loss of equity into concrete loss of income.
Nice typo. (And nice image.)
Seems to be objective evidence that house prices in Canada, UK and Australia are overvalued, while house prices in US, Germany and Netherlands are not.