THE residential property market is not headed for a bust and the reality is that affordability today is no worse than it was in the 1960s, according to Residex CEO John Edwards.
Speaking at the Australian Property Institute Victoria State of Market conference, Edwards said affordability levels are worst in Sydney and Melbourne where it stands at 69% and prices have climbed by 7.78% and 6.91% over the last 20 years, respectively to $593,500 and $673,500.
Interestingly Melbourne and Sydney also have the highest stock shortage in the nation, 18,000 and 12,000 respectively.
However, the boom slowed in all capital cities except Melbourne. Over the year 2010, sales fell 8.84% in Sydney, 10.01% in Brisbane, 33.77% in Darwin, 16.76% in Hobart, 15.01% in Perth.
In Melbourne, it was roaring trade with sales up 30.70%.
Edwards said the government is in a no win position because electorate will complain if housing is unaffordable; or prices collapse due to surplus supply; or cost of rentals is too high.
But he believes the government is in fact doing its job well with the consequence being that price growth will stagnate and ultimately rents will increase as investors are more interested in fast money than recurrent cash flows.
Australian Property Journal
