Australian housing is not as expensive as is commonly believed, says Rismark International.
The real estate group developed a new housing affordability index which compares Australian dwelling prices with the RBA's definition of national "disposable household incomes" over time.
The quarterly Rismark National Dwelling Price-to-Income Index, which was released for the first time today, revealed that Australian house prices have not risen relative to disposable household incomes since late 2003.
Christopher Joye, Managing Director of Rismark International said that the fact that there has been no discernible increase in Australian house prices relative to disposable incomes since the end of the last boom in 2003 is one important explanation for the exceptionally resilient performance of Australia's housing market during the GFC.
"In contrast to claims that Australian house prices are 7-8x incomes, Rismark's National Dwelling Price-to-Income Index implies that the true ratio across all regions and all property types is around half this estimate."
"This suggests that Australian housing is not as expensive as is commonly believed. It
also reconciles with RBA analysis highlighting Australia's internationally low mortgage default and mortgage stress rates," Joye said.
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