THE WRITE DIRECTION: Reality for Australian real estate values

BECAUSE we are living in similar circumstances to the rest of the Western world, what is the reality for real estate values in our country?

International news agency Reuters put together a report on real estate markets in Canada and New Zealand, which has become available in Australia this month.

It caught my eye because I have just returned from five weeks on both coasts of Canada and I’ve visited NZ twice a year for fishing trips in the last 17 years.

The state of their economies and the obvious value of housing, plus the incomes needed to purchase and maintain housing, is of interest to me, as it should be for every Australian – particularly as these countries are the closest ‘like economies’ to us.

While Canada is larger and New Zealand is smaller, we all speak English and have similar ethnic forebears. Even our currencies have similar values, so what is happening in both countries must closely resemble outcomes over here.

Both Canada and NZ are undergoing reduced values for personal property, and both are seen to be ahead of Australia on where their economies are heading in the present economic cycle.

We all remember that Auckland achieved a million-dollar sale price for a suburban home well before Sydney. And because it’s a much smaller country than Australia, its price movements can be seen as more dramatic.

Canadian housing prices took an earlier hit to their values during COVID and, like NZ, have seen their prices in decline for the past four years.

History of markets calls these economies ones that react faster than in Australia. But fear not, we follow our brother countries with each move.

With housing prices on the slide here, it’s a safe bet that we will continue to decline in a similar way to Canada and New Zealand, as our housing supply remains dismal, the cost of building is being dragged higher due to inflation, our governments don’t seem to be able to stem the immigration flow, and interest rates are moving higher as our nation continues to increase its borrowing.

We don’t seem to have the political will or motivation to address these issues.

And, knowing these things, buyers have decided to fold their arms and wait for price reductions before they purchase.

By John BLACKBOURN