THEY say Australians love their homes, or is it more of being able to own a house and make money from it?
Traditionally, the rule of thumb was that over the past 100 years, on average decent real estate doubled in value every 10 years or so.
Australia has some of the most expensive housing in the world, and maybe that’s why some economists say that the Australian housing stock is overvalued by up to 45%.
This is not helped by the fact that by the time you walk into your new home, governments have already taken up to 25% in indirect taxes and charges.
The biggest relative change in house prices came during the period 1985 to 2000, when they rose from around two-and-a half times income to five times income.
The effect of this market was that people started to use their houses as an investment rather than a home, and this isn’t very good for making neighbourhoods in the traditional sense.
Australia had one of the highest rates of home ownership in the world at about 70%, but the GFC pulled this back to about 65%.
This is still high by world standards.
In many countries houses are rented for generations.
Now the economy is back on a relative even keel, and while the current interest
rates are low, the debt servicing of a mortgage needed to buy an average house is about where it has been over the past 30 years.
PHOTO: CONTRIBUTED – NOT SO BAD: While the current interest rates are low, the debt servicing of a mortgage needed to buy an average house is about where it has been over the past 30 years.