Why will house prices fall in Australia?
Property in Australia is globally overvalued. It is simply more expensive to purchase or rent an equivalent home here than most other cities globally. And there really is a large expanse of unoccupied Australia, which does not support high prices. Visits even to pricey-property cities like Paris, Vienna and Boston highlight how little any of us receive for our property dollars in most Australian capitals. There is a disconnect between market value and how much of the price is comprised of: a) intrinsic value b) market distortions like capital gain taxes or stamp duty c) speculative value d) area/city value The reality is that speculative component is too strong, and a tax regime in Australia that favors asset purchases over wage income has enhanced the upward rise. Which is what I have been saying for the last 4-5 years about Sydney, and last 2-3 years about Melbourne. The Howard government created these artificial over-valuations, encouraging speculation, via tax, fiscal and monetary
