Australian Median Property Prices from 1982 to 2004
May 11th 2005, 1:55 pm
#31
Lost in BE Cyberspace
Joined: Nov 2003
Location: Scotland
Posts: 7,949
Re: Australian Median Property Prices from 1982 to 2004
Originally Posted by sackofspuds
Too true. The thing is, for anyone who has children (and therefore needs a house rather than a flat), they are going to go through a stage where they do not have two full time incomes. This stage will last years and even when it's over there are childcare costs.
As for dual income families resulting in a one-time and irreversible adjustment to house prices, I don't buy it. I heard precisely the same argument put forward in the late 80s but prices in the UK and Australia still crashed in the early 90s.
The bottom line is that we're experiencing a bubble in house prices and therefore will correct to historical average income multiples. Unfortunately, bubbles tend to overcorrect - the UK bubble of the 80s bottomed out at 2.9 x average income.
Anyhow, here's an interesting article about it from GMO:
https://www.gmo.com/NR/rdonlyres/E5E...r_1Q05_ALL.pdf
As for dual income families resulting in a one-time and irreversible adjustment to house prices, I don't buy it. I heard precisely the same argument put forward in the late 80s but prices in the UK and Australia still crashed in the early 90s.
The bottom line is that we're experiencing a bubble in house prices and therefore will correct to historical average income multiples. Unfortunately, bubbles tend to overcorrect - the UK bubble of the 80s bottomed out at 2.9 x average income.
Anyhow, here's an interesting article about it from GMO:
https://www.gmo.com/NR/rdonlyres/E5E...r_1Q05_ALL.pdf
"Over the years we have asked over 2,000 professionals for an exception to our claim that every asset class move of 2 sigmas away from trend had broken, and not one of the 2,000 has ever offered an exception". He then goes on to say that oil prices MAY just be the first thing to break away (if Chinese growth and supply problems continue).
I noticed that Grantham quotes one Modigliani in the 2nd article!!?? The name seems familiar somehow.
I wonder whether Canary Wharf will go before Sydney?
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