ABCDiamond

It does appear so, for some weird reason....

London
Average asking price for all London properties for sale in June 2010 was £656,925 (based on 16,580 advertised properties). http://www.londonpropertywatch.co.uk/avg_prices.html
So if these are 33.8% overvalued, the real value should be £490,975 or about 18 times the median UK full time wage.

Using the same reasoning for
Sydney.
Average Sydney House Prices $510,000 http://www.myrp.com.au/sydney_house_prices.do
So if these are 61.1% overvalued, the real value should be $316,770 or about 5.2 times the median Australian full time wage.

How do they work these things out ?

Although these do compare UK asking prices v Sydney RP data pricing, the difference of 18 times to 5.2 times, cannot be explained by that.

My calculations would show, based on a real property value of 4 times average wage:

London would be £108,000 which means London is 608% overvalued
Sydney would be $240,000 which means Sydney is 212% overvalued

Maybe I got something wrong... anyone fancy checking it ?

coolshadows

Why use the median UK and not the specific inner London median?

If you look at wages, there is a greater difference across the UK than there is across Australia.

Stop bending the stats to fit.

(you sure you're not a politician?)

[On one hand Jeremy Beadle had a small todger, but on the other hand it was quite big]

ABCDiamond

So we should compare the inner London median wage to the Australian overall wage ? You really think that is a fairer comparison ? Not bending anything to suit ?

But if you say so...

So, the Inner London median house price compared to the average Australian house price is....
Is that what you think is fair ? Or does it only apply to one side of things, when it suits ?

If you want to compare the inner London median wage, then you also need to compare the inner Sydney Median wage, neither of which I have. Do you have these two figures handy ?

rinkerdink

Sorry Diamond but that has to be the single most boring question i have ever known.

I'll be interested in the outcome tho

ABCDiamond

OK, i'll work on it



In 2001 when the NSW average wage was $37,191, it appears that Inner Sydney was more like $77,000.
But then, defining inner Sydney isn't easy.

If we assume that is about right, then the current inner Sydney average wages would be about $145,000 (or £82,000)

From personal experience, when I was working in the Sydney CBD, in the early 1990's, an accounts clerk in our office got about $30k-35k, and a qualified CA about $75k -$90k. These are the figures I recall from doing the payroll. But this was dead centre CBD. I think I was on about $50k in 1992.
Note: these are not averages, just a few actual examples from my own experience.

coolshadows

My point - wages in inner London are likely more than double (or even x3) the UK median. You can't say that about Sydney (or any other city in Australia).

ABCDiamond

I think I did in my earlier post.

coolshadows

That was almost 10 years ago.

Do you believe that the median Inner Sydney wage is around $140,000 or more today?

freebo

"More concerning, however, is our analysis of “fair value” in housing, which is based on comparing the current ratio of house prices to rents with its long-term average. By this measure Australian property is the most overvalued of any of the 20 countries we track. "

From http://www.economist.com/node/165428...42826&fsrc=rss

ABCDiamond

It was only about 4 hours ago

ABCDiamond

Maybe it is ? If they were double the average NSW wage in 2001, what would have changed for them to be no longer double ?
Have the lower paid had much faster wages rises than those in the higher paid areas to bring the difference closer ?

iamthecreaturefromuranus

Yeah, like THAT's going to happen.

asprilla

This is a very poor article.

pomtastic

Comments please.

So, can you better it? Show us your analysis or better still your highly geared investment portfolio -

Actually, I agree with the article because rents are driven by what people can actually afford to pay versus house prices are determined by credit. My rental is $400 a week, house is worth around $600K and would cost around $800 a week mortgage with minimal deposit. Why aren't I being charged $800 a week then? Because we couldn't afford it and the I doubt if anyone else would pay that asking price. This is where I believe The Economist is correct in it's analysis.

freebo

Maybe its a bunch of leveraged rental properties!