A study by Demographia has shown Australia has the most cities with “severely unaffordable” housing. The Sunshine Coast ranked the worst for affordability of 265 markets surveyed, followed by Honolulu, the Gold Coast, Vancouver and Sydney. Melbourne and Adelaide were equal 12th place and was found to be less affordable than New York and London.
The report showed affordability in Australia was worsening relative to other countries such as Britain, Ireland, the US and NZ after crashes in their property market. This has lead to predictions by Demographia that the Australian bubble is yet to pop :
The public policy group Demographia, which conducted the study, said affordability in Australia was worsening relative to Britain, Ireland and New Zealand, where prices had recently collapsed.
Australia would be next, it said. “Sooner or later, the inherent instability that characterises virtually all bubbles will lead to house price declines in Australia.”
Meanwhile, the Herald Sun reported yesterday that house prices in Melbourne has fallen 10 percent late last year while repossessions shot upwards. There were 1682 repossessions last year, and increase of 22 percent over the last year.
On the 19th of this month, the Australian reported house prices in Perth fell 4 percent in the December quarter, with a yearly decline of 11 per cent.
With double digit falls being reported in many states and as there are lags in collecting and reporting prices, it’s quite possible Demographia comments about the bubble yet to burst is three to six months too late. Demographia’s report is based on the September ’08 quarter which is increasingly looking like the top of the bubble.
The ABS is due to release December ’08s House Price Indices at 11am on 2nd February (Next Monday). The index last reported a 1.8% fall in house prices across the country between June to September and no doubt all eyes will be glued on what it has to say.