Australian real estate the worlds most expensive

Australian housing world’s most expensive
By Aileen Keenan
Property Editor
August 26, 2005

AFFORDABLE home ownership has slipped further from reach with a US report revealing Australian real estate is the most expensive in the world when adjusted to median household incomes.

Access Economics director Chris Richardson said four Australian cities featured in the world’s 10 most expensive, when median house prices were compared with median household income.

The data from United States-based research group Demographia, which was interpreted by Access Economics, found Los Angeles was the most expensive international city, then San Diego and Sydney.

Melbourne ranked eighth on the list, followed by Hobart and Adelaide. Brisbane was the 11th most expensive city.

Australia had the dubious mantle of having the world’s most expensive real estate on an adjusted basis, followed by New Zealand.

Mr Richardson said Australia was also the most interest-rate-sensitive nation because of the crisis in housing affordability, and he criticised the Reserve Bank’s decision to raise rates by 0.25 per cent in March.
“It was certainly a mistake, but not a disaster,” he said.

The head of property research at Macquarie Bank, Rod Cornish, said any calculation of housing affordability needed to take into account interest rates, but he conceded that Australian cities rated as some of the most expensive in the world.

Mr Cornish said the most accurate measure of house affordability was the percentage of household income used to service a mortgage, which had fallen in several cities in the past year.

The latest estimates from AMP and the Real Estate Institute of Victoria say that the average family would need to devote almost 30 per cent of its income to monthly loan payments to afford an average house in Melbourne. But Melbourne was far from the worst case, with loan payments on an average house eating up 31 per cent of the average family’s income in Brisbane, and 36 per cent in Sydney.