Australia: Property risk highest in a long time

Gold, Stocks & Forex

Posted by Houses and Holes in Australian Property, May 20th 2013:
Index

MB contributor, Rumpletstatskin, wrote an interesting post on the Australia property cycle this morning. In it he mused that:

The crucial lesson in all this is that Australian nominal asset prices have been supported by fiscal policy during the financial crisis, ongoing monetary policy adjustments, and foreign investment (including in mining infrastructure), which all supported employment and incomes.

This support allowed a slow melt adjustment since the financial crisis. Home prices have fallen, mortgage rates are down, and rents have increased. This means that buying a home is more affordable compared to renting than it has been for 15 years.

My message, if it wasn’t clear, is that if you have been holding off purchasing a home because of the risk of capital losses, then these risks are probably lower now than at any time in the past decade…

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