I’ve been saying for years that Australia’s supposedly “miracle” economy has been masked by domestic real estate churn and it looks as things might be finally coming to a head.
Australia currently has one of the most unaffordable housing markets in the world with Sydney having the 2nd least affordable housing market in the world, after Hong Kong.
In recent years, domestic house prices have been driven through the roof by foreign buyers, particularly Chinese, who have had virtually no local restrictions or quid pro quo placed on them (unlike other markets such as Norway which require foreign buyers to invest in low-cost social housing programs). Over the last couple of years though there have been a number of capital restrictions which been put into place by both the Chinese and Australian Governments which has seen new investment in the Australian market plummet. This has left the Australian property sector relying relying on a domestic market which can no longer afford it. Australia’s household debt to income ratio has hit nearly 200 per cent, one of the highest in the world.
So what does this mean for the Land of Oz? Well, after having the worst performing developed nation currency in the world in 2018 with things projected to grow worse over the coming years, it might be time for Aussies (including me) to start looking off-shore when making their retirement plans.