High pay, low rates too little for real estate rise
Oct 2nd 2003, 7:48 pm
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Joined: Aug 2003
Posts: 11,149
High pay, low rates too little for real estate rise
http://www.smh.com.au/articles/2003/...988347499.html
Spiralling housing prices over the past decade have risen much higher than is justified by lower interest rates and rising incomes, a new report has found, suggesting Australian home prices are dangerously over-inflated.
Analysis by investment bank JP Morgan shows that if prices had risen since 1992 in line with home buyers' ability to afford them, the average house in Australia would now be 18 per cent cheaper.
The report says the median house price has increased 140 per cent since 1992 but the low level of interest rates and increased incomes in that period can only justify a 97 per cent price lift.
While analysts have argued that the apparent "bubble" in property prices is justified by today's historically low mortgage rates and bigger pay packets, the report says prices have far outstripped the increase in people's ability to afford them.
Spiralling housing prices over the past decade have risen much higher than is justified by lower interest rates and rising incomes, a new report has found, suggesting Australian home prices are dangerously over-inflated.
Analysis by investment bank JP Morgan shows that if prices had risen since 1992 in line with home buyers' ability to afford them, the average house in Australia would now be 18 per cent cheaper.
The report says the median house price has increased 140 per cent since 1992 but the low level of interest rates and increased incomes in that period can only justify a 97 per cent price lift.
While analysts have argued that the apparent "bubble" in property prices is justified by today's historically low mortgage rates and bigger pay packets, the report says prices have far outstripped the increase in people's ability to afford them.
