Since the 1970s property prices have increased by approximately 3% per annum, a figure broadly in line with inflation. From the 1990s however the yearly increase has been closer to 6% per annum, close to double the rate of inflation.

From 2003 to 2010 house prices in capital cities, excluding Sydney, doubled in value. Sydney saw growth of 17%, after tremendous (and singular) growth during the 1990s. Thus the 2003 to 2010 figures represent other cities catching up rather than Sydney slowing down for any intrinsic reasons. With prices increasing so far above inflation the real cost of housing has been going up, well beyond increase in wages.

Australia is far from the only country to have high real estate inflation through the 1990s and 2000s. Similar over heating occurred in the UK, USA, Netherlands, Ireland and Spain, among others. However all of the aforementioned countries experienced significant price devaluation after the 2008 Global Financial Crisis, in some cases by as much as 25%.

Australia saw a slight dip in prices in 2007/2008, followed by very strong increases in 2009. The 2008 to 2010 period saw growth of around 15%. In this respect the Australian real estate market is unique.

The median multiple is a measure of the ratio between the median house price and the median income. A measure of three for instance means that the median house price is three times the median income. Three is in fact considered the benchmark of affordable housing, and historically Australian capital cities had median multiples close the three.

Today the capital city median multiples in Australia are 6.6. Sydney and Melbourne are the highest at 7.1 and 7.0. These numbers show that prices are far from affordable, and there are grave social implications arising, where home ownership becomes out of reach for typical workers.

It is of course possible that no crash will come, or that rather than a crash there will be a fizzle: a long drawn out cooling of prices. While the economy remains strong, driven by the mining sector, there is also the chance of business as usual. However, a sudden change in factors, such as rising unemployment, or rising interest rates, could have a sudden and devastating effect. Events throughout the world in the GFC have shown that a seemingly steady ship can founder remarkably quickly. |investment property for sale |caribbean property|quick house sale Gardiner Kolding