Monday, April 19, 2010

Are Australians deluded?

Not about God, but about house prices. We have one of the highest levels of home ownership in the world and one of the largest fraction of personal investment (and debt) is in personal homes.

Now we have a new distinction. According to the Economist a good measure of whether house prices are over-valued is the ratio of house price to rental income compared to its historical average. Currently, Australia has the highest value in the world! (56%) For all you budding home buyers about to embark on financial slavery consider this warning from the Age.

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