Australian Housing shows strength.

Australian Housing shows strength.

The latest Credit Suisse Global Yearbook says that since the 1950s, Australian housing has been stronger than nations such as Britain, the US and France.

Therefore, people who say our house prices will crash because they are more expensive than overseas may be waiting a very long time – it has been this way for six decades.

US house prices have had the weakest long-term growth and there are factors reinforcing our real estate market that make a crash unlikely.

AMP Capital chief economist Shane Oliver says the US had both a price bubble and a building bubble before its recent crash, while Australia only had a price boom and it is estimated we still have a housing shortfall of 200,000 homes.

Australian home prices have grown much faster than inflation over the past six decades, out-performing countries such as the United Kingdom, France, Netherlands, Norway and the USA.

Based on a log scale starting at 100 at the beginning in the 1900’s, and with prices adjusted for inflation,

• United States is now at 110,
• Norway at 280,
• Netherlands 286,
• France 336
• United Kingdom 436.
• Australia is on 927 and has been leading the way since the 1950’s.

“Some people seem to be expecting a crash. The reason I don’t think this will happen is because we have relatively strong population growth compared with other countries, USA is growing at 1% PA, Australia is growing at double that rate, 2% growth PA”

Oliver expects Australian house prices to pick up in spring and then grow in line with inflation for several years.

According to HSBC’s chief economist for Australia and New Zealand, Paul Bloxham, there are good reasons for Aussie home prices being high by global comparisons – an undersupply of homes and an urban structure with most people living in big cities with few apartments.

“If there was a risk, you would see house prices fall dramatically – you already would have seen it happen,” Bloxham says.

“While you have seen house prices come down in the past 18 months, you haven’t seen home loan arrears rise very much.

If people have jobs and incomes, they can continue to repay mortgages.”

Parker Asset Management portfolio manager Tim Riordan says, “Our overall market has been sheltered by low unemployment and Asian growth.