Australia’s Property Market is not Overvalued
Michael Matusik, a leading property investment advisor, recently wrote a review in Property Observer disputing a report published in The Economist, which claimed that Australia has the fourth highest overvalued global property sector but that the risk of a housing bubble has subsided.
Matusik challenged the report, which measures Australia’s housing affordability as ranking fourth - behind that of France, the Netherlands and Canada - based on the ratio of personal income to loan and rent payments.
He disputed the calculations which concluded that Australian housing prices are overvalued by 24% against a personal average disposable income, and 44% against rents.
Matusik believes that the pundits reporting housing affordability in The Economist have got it very wrong. He claimed that they have a problem with their perception of the Australian property sector simply because Australia hasn’t experienced a dramatic housing correction or bust like most other developed economies.
His view is that generally most economists have a poor understanding of the real dynamics and influences surrounding property markets.