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1.Market Observations, 8.Was Sticky

28 Oct 2017 (AFR) – Correction no cause for panic – House prices in the long-term look positive despite rate hike

(28 October 2017, AFR, p31, by Christopher Joye)

‘If you take the median house price in 1980 and raise it by both the increase in disposable household incomes and the expanded borrowing capacity enabled by the reduction in mortgage rates to June 2017, you will find that today’s house prices are only 3 per cent overvalued. That’s based on research by IFM chief economist Alex Joiner. But here’s the rub: this analysis crucially assumes that today’s all-time record lows in mortgage rates persist forever.’

Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

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