Hi Property Lovers
I came across this article on Australian Property Investor which i think was a good read.
Australian households are able to cope with high house prices due to lower spending elsewhere, but first homebuyers may struggle to enter the market, Reserve Bank of Australia (RBA) deputy governor Ric Battellino says.
Battellino says the ratio of house prices to income in Australia is higher than it was 20 years ago and is higher than in the United States.
But he says the experience of the past few years suggests "the Australian household sector as a whole appears to have the financial capacity to sustain a relatively high ratio of housing prices to income".
Lower interest rates have given Australians more buying power over this period of time, which has been reflected in house prices, Battellino says.
"There are a couple of reasons why Australian households seem to be able to sustain a higher ratio of house prices to incomes (than in the United States)," Bettellino told the National Housing Conference in Melbourne.
"First, Australians seem to spend less of their income on non-housing consumption than is the case for US households, with a significant part of this difference explained by lower health costs in Australia."
"Australian households therefore have greater capacity to service housing loans."
"Second, the level of gearing in the United States housing market is noticeably higher than in Australia. This may reflect the fact that Australian households are more active in paying down their loans after buying a home, possibly because owner-occupied mortgage interest rates are not tax deductible here as they are in the United States."
"The faster pay-down of mortgage debt in Australia reduces the risk of borrowers subsequently getting into financial difficulty."
However, Battellino says the capacity to sustain higher house prices may not be evenly distributed through the population.
"Many 50 to 60-year-olds, having benefited from the prolonged economic expansion over almost 20 years and the accumulation of superannuation savings, are in a strong financial position," he notes.
"This has encouraged a change in financial behaviour, with many households in this group being more inclined to stay geared up later in life, using the funds to upgrade or expand dwelling investments. It's likely that this changed behaviour has been a significant factor in the housing developments we have seen over the past 10 to 15 years."
"In contrast, the typical first homeowner cohort – those under 35 years of age – has experienced a noticeable decline in home ownership over the past 10 to 15 years."
"It may be that this is being driven by demographic factors – such as the fact that young people are staying in education longer and delaying the formation of new households – but it may also be financially driven."
Australian Property Investor deputy editor Matthew Liddy says Battellino is addressing one of the subjects often cited by economists and pundits who believe Australia's house prices are unsustainably high.
"Such commentators often cite the ratio of house prices to income in Australia as evidence that house prices can't remain at current levels or continue to rise, as they believe the change from historic norms is unsustainable," Liddy says.
"Battellino's comments suggest the RBA sees things differently."
This information was gathered from:
Thinking of buying or selling in Nedlands? Call me anytime
Accommodation: 4 bedrooms, 2bathrooms, open plan gourmet kitchen meals and living, large up stairs rumpus room, pool, double secure lock up garage.
With its prime elevated position boasting sweeping river and district views this very special home will not last.
Accommodation:6 bedrooms, 6 bathrooms, study, formal lounge & dining, large open plan gourmet chefs kitchen meals and living, theatre room with bar, full size gym with sauna, alfresco area, pool, triple car.
No expense has been left & only the highest quality of finishes used throughout to make sure your home allows you to feel that your living in a resort everyday!
Accommodation: 5 bedrooms, 2 bathrooms, formal living & dining, kitchen, casual meals, large living area, semi-alfresco area, sprawling backyard, double secure lock up garage.
Located in the "Melvista Ward" end of Webster this single level sprawling home will not last!
Accommodation: 4 bedrooms, 2 bathrooms, study, open plan gourmet kitchen meals & living, brilliant alfresco area with outdoor kitchen, double secure lock up garage.
Located in a quiet leafy street this brilliant single level home allows you to have a lifestyle so very relaxed!
Accommodation: 3 bedrooms, 2bathrooms, study, formal lounge and dining, kitchen & casual meals, living area, alfresco area, large landscaped gardens, double car port. 
In a location so highly sort after and with so many opportunities this home will not last!
