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by podperson
5340 days ago
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As an Aussie living in the US and somewhat out of touch with what's going on back home, I'm fascinated and confused by this. Are you arguing FOR or AGAINST the idea that there's a significant asset bubble in Australia? We were recently looking at relocating to Sydney and were blown away by how prices (including rents) had increased since I last lived there (in 2002). The interesting thing to me is that rents in Australia seem to have skyrocketed while prices have not (they're high, but rents are higher). In the US the housing bubble was characterized by prices increasing far faster than rents (which led to an illusory improvement in standard of living as people borrowed against "equity" and spent the difference). It looks to me as though Australian rents have risen faster than prices, which presumably has the reverse effect. |
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US prices were driven by rampant speculation fueled by shady lending practices where the lenders weren't accountable for defaults and a product that was doomed to failure from the start.
While there has been speculation in Australia, it seems driven largely by structural changes in the economy. Resources has brought a lot of money in. Those people traded up for property closer to the ocean and/or the city, driving up those prices leaving new entrants to live further and further out.
This is basically a natural phenomenon that happened in a somewhat accelerated fashion. I see a plateauing of prices for some years to come as a result.
Rents are simply playing catch up with the change in house prices. They always lag. There's nothing surprising here.
It is however concerning because Australia is very much dividing between the haves (construction/resources) and the have nots (everyone else).
I largely missed this bubble as I was working in Europe at the time (2001-2004). As it turns out, financially speaking I would've been better off buying a house for $80k (in 2000, worth $350k+ in 2004-2005) and sitting on a beach in Spain for 4 years than working.
Australia just isn't that attractive a place to live (for me) now and that's kinda sad.