Drea Knufken
US real estate prices are at record lows, but our cousin down under has quite the lucrative market, thanks to a housing shortage. Bloomberg has more:
…a shortage of 200,000 dwellings…is helping fuel Australian home prices, which are 82 percent higher than in the U.S., and disproving investors such as Jeremy Grantham, who says they will fall 42 percent as interest rates rise in one of the world’s priciest home markets.
Home prices in Australia surged 20 percent in the year to March in an economy with a 5.2 percent jobless rate, about half U.S. and European levels. Government stimulus and demand for raw materials from China helped Australia skirt a recession and escape a housing slump since the onset of the global financial crisis.
Australia’s median home price was 6.8 times gross yearly income last year, compared with 5.1 times in the U.K. and 2.9 times in the U.S., according to the annual Demographia International Housing Affordability Survey. The nation of 22 million people has six of the 10 most unaffordable cities among the U.S., U.K., Canada, Ireland, New Zealand and Australia, the survey showed.
“Over the next 10 years, Australia needs to build about 420,000 homes more than were built over the past decade to meet demand,” according to one analyst interviewed in the Bloomberg article. Developers must be chomping at the bit to get a piece of this bubble before it blows.
