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Australian Property - Stairway to heaven or close to the precipice?
There has been much debate in recent times regarding the outlook for the Australian residential property (housing) market. Written by Michael Karagianis (MLC Investment Strategist), the attached paper explores the following questions: Is the Australian housing market significantly overvalued? Are Australian house prices likely to fall? Residential property as an investment?
The key points from the paper are summarised below:
The Australian housing market appears expensive on a number of international and historical comparisons, following virtually continuous appreciation over the past decade or so
A combination of poor affordability, overvaluation and rising interest rates are likely to undermine the outlook for house prices in Australia over the coming years
Australian house prices may experience a decline of 10-15% on average over the next 1-2 years albeit with significant variations across the country
Longer term, Australian housing could deliver modest returns for the next 5 to ten years as prices stagnate
Housing currently makes up around 60-65% of gross household wealth in Australia. Based on a more cautious view, this may be considered excessive
I encourage you to have a look at the attached paper as it may provide some interesting content for your client discussions. I appreciate that it's just one view and may not be what many want to read, nevertheless it makes for a good discussion.
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