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Australian Properties Unaffordable. Is It Really So?

unaffordable housingHousing demand has made homes expensive to some of us. There is a fast building public perception that houses in a few areas are close to being unaffordable. However, this line of thinking does not hold too much merit. In fact, Australia rates pretty favourably when you compare its property prices to the housing costs in a few developing countries. Statistically, Australia is close to being 6 times cheaper than Mumbai (India); world’s costliest place for buying property, writes Michael Yardney for the blog Property Update.

Let us say your income is close to the national average and you live in Singapore. You would then require paying the amount you earn in 43 years (adjusted for inflation) to buy 100 square metres of a luxury home. The figure ‘43’ will be 48 for New York and 54 for our country.

Mumbai easily the most unaffordable property market

While Shanghai is definitely a lot more expensive, requiring a homeowner to put in 233 years of his income for an equivalent property, it is Mumbai which holds the top spot. Yes, gulp it down- A Mumbaikar needs to put in his cumulative earning effort of 308 years to get hold of 100 square metres of a luxury property.

Developing countries create grounds for unaffordable housing

Yardney is not surprised. He feels that it is only befitting for property prices to be more expensive in developing countries. In developed countries, the gulf between the rich and the poor is pretty narrow, whereas the difference is pretty stark in developing countries.

A few who make quick money and sail beyond the common mass (in developing countries) push the property prices really high; making it nearly unaffordable for the others.

Enough reason for us to dismiss the idea that Australian housing is unaffordable.

You can read the original article here.

Australia and Mumbai in two different property phases

Real estate prices go through 6 phases. In my opinion, the prices in Mumbai or places like it are usually so high because they fall between the ‘euphoria’ and ‘build-up’ phases (a common peril in developing countries). In such cases, the number of property transactions keeps going up despite the increasing prices till a bubble is felt.

Our country is safe in its ‘early fall’ or ‘consolidation’ phase and hence property prices are lot more sustainable without any fear of the bubble.

Do you find Sydney expensive, knowing what it offers, compared to other cities?