Slow wage growth pressures overvalued housing prices - Australia

What goes up will eventually come down. Australians seem to think that living in the most sparsely populated country on earth means that we should have the most expensive housing. Nice if you can get money out of it, but try paying rent or mortgage. It simply can't last forever.

Now with pressure on wage growth, people aren't going to be able to keep paying increasing prices for houses. It's inevitable that with less income people won't have the capacity to pay. Whether or not it's a very big correction or not who knows, but this is certainly looking like the start of something. 

Of course I may be entirely wrong. I would continue to assert however, even if this isn't the time, Australian housing is in for a big price correction. It's only a matter of time.

The report goes on to say that wage growth has fallen below inflation.  

In its latest quarterly update, the Swiss-based Bank for International Settlements (BIS) has published extensive historical analysis on historical home prices in a large number of countries for which reliable data is available. 

Confirming a recent analysis by the International Monetary Fund, the BIS has found that Australian home prices are higher than they typically have been when compared to rents and incomes. 

Despite having had no real (inflation adjusted) property price growth over the three years up to when the BIS figures were taken at the start of 2014, Australian homes had the equal fourth highest price-to-rent ratio and second highest price-to-income ratio. 

Australian home prices were 50 per cent higher than usual relative to rents, and around 40 per cent higher than usual when compared to incomes. more