Let’s give thanks for what we have
HOW lucky are we? We have plenty of things to give thanks for during this super-long long weekend and one is our real estate market. While for some the market may seem stuck in neutral right now, on other levels it’s purring like a contented kitten.
First, the bust that never happened here but smashed most of the Western world. US house prices slumped by more than 30 per cent and some US states, such as Florida, had price falls of more than 60 per cent.
In Dublin, house prices are down 53 per cent from their 2006 peak while London’s prices fell more than 20 per cent.
Adelaide’s median house price in 2006 was $287,000 and today it’s $410,000.
But some forecasters say we’re heading for a fall.
Adelaide was ranked among the world’s most unaffordable cities in a report released in January by Demographia.
It was less affordable than New York, Washington, greater London and Toronto but slightly more affordable than Sydney and Melbourne. I don’t believe there’s a bust coming – partly because the thought of it frightens me silly and partly because economic fundamentals here are different from overseas.
Prices crashed elsewhere because supply grossly exceeded demand.
Spec homes popped up everywhere during those countries’ property booms last decade but there was nobody to live in them.
Australia has a housing shortage of 16,800 dwellings this financial year, according to the Housing Industry Association, which predicts that shortage will rise to 21,000 dwellings in 2011-12.
Our rental vacancy rates are about 1 per cent so there’s no shortage of demand there.
In the US, real estate investors who watched their property drop in value could simply hand their keys back and the bank would have to wear the shortfall.
Not so here, where the bank can take your other assets – even your own home – if you default on an investment loan.
On a state level, our prices are still the most affordable in mainland Australia and our rents are the lowest, meaning we remain very attractive for investors and buyers if things go pear-shaped elsewhere.
Defence and the mining boom have given our economy and employment outlook a bright future.
On a social, global level, all Australians are lucky when it comes to property, whether they’re owners, investor, renters or even public housing tenants.
On a 2003 camping trip through Africa, my wife and I visited some townships where the houses were made from cardboard boxes.
One home, made almost solely from Omo detergent boxes, is stuck in my brain forever.
In another cardboard house, we asked t he smiling owner what happened when it rained. ‘‘It never rains,’’ he replied.
Proudly showing us their homes and decorations, these people knew nothing of median house prices, housing shortages and property investing. And they didn’t care.
We certainly have a lot to be thankful for.