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Aussie Housing Bubble Deflating

By | | Housing
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When America’s housing bubble burst in 2006, housing prices in Australia hesitated only briefly before continuing to rise. Prices since then have risen to extreme levels, but now the Australian housing bubble seems to have reached its peak and is rapidly deflating. This is having dire implications for Australian banks, its currency, and its economy as a whole.

With the support of urban planners and “sustainability” advocates such as Peter Newman, most Australian states began imposing strict growth limits around major cities in the 1990s. The result was a rapid decline in housing affordability. In Melbourne, for example, median home prices rose from about 3.5 times median incomes in 1997 to 7.0 times in 2004.

According to Wendell Cox, who has been keeping track of housing affordability since 2004, prices in all major Australian housing markets were unaffordable by that year, with median home prices being at least five times median household incomes. While prices in some markets briefly dipped in parallel with those in the United States, prices in Sydney and Melbourne have risen dramatically. By 2015, Cox ranked Sydney second only to Hong Kong as the least-affordable housing market in the urban areas he studied (which are mainly in English-speaking nations). Continue reading →

Property Bubbles Down Under?

By | | Housing
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In an eerie echo of statements made before the collapse of American housing bubbles in 2006, leading Australian bankers claim that Australia is not suffering a housing bubble. Yet prices are unsustainably high and a collapse is inevitable, though when it will happen may be unpredictable.

Median home prices in Sydney are AU$795,000 (US$606,000). More Sydney suburbs have median prices over AU$2 million than under AU$600,000.

America’s 2008 financial crisis didn’t lead Australian housing prices to fall. In fact, prices in Sydney have grown 106 percent and in Melbourne 88 percent since then. Ominously, however, prices in Melbourne, which are nearly as great as in Sydney, are falling for the first time in four years.

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Aussie Housing Bubble

By | | Housing
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That sound you hear the next time you go to the beach (at least on the West Coast) may be the Australian housing bubble popping. After Hong Kong, Sydney is rated the second-least affordable housing market in the world (see page 12), with median home prices more than twelve times median household incomes–and that’s based on 2014 data. Prices since then have gone up much faster than incomes.

As of September, prices in the country as a whole are 7.2 times incomes; that’s more than all but a handful of urban areas in the United States. Home prices and price-to-income ratios have both risen sharply since 2000. The country’s housing stock is worth nearly US$4.5 trillion, or roughly 20 percent of the U.S. housing market, which is pretty high for a country that only has 7.5 percent of the U.S. population.

Economists have been expecting Australian home prices to collapse for some time, and it hasn’t happened yet. But the UBS Housing Bubble Index ranks Sydney as the fourth-riskiest housing market in the world, after Vancouver, London, and Stockholm.

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Reviving the Great Australian Dream

By | | Housing, Regional planning
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In the minds of Australians, the term “Australian dream” is even more firmly associated with homeownership than the term “American dream” is in the minds of Americans. For more than a century, Australia has enjoyed higher homeownership rates than the United States.

Yet now the Australian dream is nearly dead thanks to state land-use restrictions that have made Australian housing some of the most expensive in the world. According to Wendell Cox’s housing survey of English-speaking countries, Sydney, Australia is the second-least affordable urban area, with only Hong Kong being less affordable. Hong Kong at least has an excuse of somewhat limited land area.

Some blame the housing crisis on the “concentration of wealth,” when in fact the opposite is true: by making housing expensive, the government has concentrated wealth in the hands of existing homeowners at the expense of renters and recent and aspiring homeowners. Others suggest that Australians should dream about something else, as if there is little anyone can do to ever make housing affordable again.

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Self-Driving Cars Superior to Light Rail in Canberra

By | | Transportation, Urban areas
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Canberra, Australia’s capital, is considering spending close to $1 billion building a light-rail line. But a new study by computer programmer Kent Fitch finds that shared, self-driving cars make a lot more sense.

Where light rail would lose money, a fleet of shared, self-driving cars could earn a profit. Where light rail would serve just one corridor, self-driving cars would serve the entire urban area. Where light rail would require a massive expenditure on new infrastructure, self-driving cars would use existing infrastructure. While light-rail would require people to walk to stations and wait for a railcar, more than 96 percent of self-driving car patrons would have to wait less than a minute for a car to meet them at their door.

Fitch observes that Canberra, being entirely a twentieth-century city, is simply not designed for public transit, which is why ridership on the city’s stagnant or declining. When a city is too decentralized for “medium-box” transit like buses, the solution is not to go to “big-box” transit, which only works if a lot of people want to go from point A to point B at the same time. Instead, the solution is smaller-box transit, such as shared cars.

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