Australian Median House Price to Crack $1mil?

[Brendan]

I have a few books by Michael Yardney and am part of his mailing list as his predictions are often right when it comes to property.

He has posted a recent article ( Why median house prices could be well over one million dollars by the end of this decade (http://www.smartcompany.com.au/property-investor/20100120-why-median-house-prices-could-be-well-over-one-million-dollars-by-the-end-of-this-decade.html) ) where he talks about the rise in house prices across Australia.. I urge you to check it out.

What are your thoughts on this.. do you agree? Are we ready for another boom - or are our house prices already over inflated?

[abd]

Hmmmm, I think house prices are already way over priced in most areas around Australia. I can't see the Median house price reaching a million dollars in 10 years time, but it will come pretty close.

I don't think we are ready for a HUGE boom yet, however I think it will more then likely start to really make ground from about 2015 onwards provided we have no more global meltdowns, terrorist attacks or wars

[The Start Up Sage]

Over-inflated.

Many of us (including me) have a vested interest in keeping house prices on an upward curve. Even journalists own homes and have mortgages.

However, bubbles have to break eventually. In Japan, a 40 year bubble was broken in 1992 (ish). Housing prices have dropped then flat-lined on the bottom since then.

Is Australia facing the same result. I don't think so as there has been some contraction and we have a strong mining/agricultural sector supporting the economy. However, I do not see a boom in property for some time to come.

[one]

Inflation will ensure that the median house price reaches $1m eventually, it's just a matter of how quickly it gets there as a result of supply and demand.

Given the vast amount of available land in Australia, it is absolutely unbelievable that we should have a housing crisis or a shortage of land. But of course the government has neglected to invest heavily in infrastructure over the last decade or more, so people are forced to live in the cities. Even people who have long family histories out in the regional areas are moving closer to the big cities, making things even worse.

Something needs to drastically change. I work in finance, and just a few weeks ago I was speaking to a fairly well paid thirty-something colleague who is currently hunting for his first house. Just ten years ago, someone in his position could expect to buy a nice house in a good suburb, but instead he is limited to an apartment close-ish to the city, or a house (which is what he wants) out in the sticks.

There is a huge imbalance with regards to the income to house price ratio, and the only way it can be addressed is by large increases to average wages (which is unlikely given the current economy) or stagnant house prices over the next five years whilst wages catch up, which is probably unlikely given the under supply we are constantly reminded about by the media.

I don't profess to be an expert on property, but I just can't see how house price growth can continue to outpace inflation by such a large margin over such a long period. It just doesn't seem sustainable. But hey, I sold my investment property in 2006 thinking the market had finished it's run, and the guy who bought it from me sold it in 2007 for almost 20% more without doing a single thing to it! Great move... :)