rofl we are living in the most severe housing bubble this country has ever seen, and very probably the worst housing/asset valuation bubble the world has ever seen. the total dwelling valuation stock to GDP ratio has risen from an (already very high) 200% in the late 1990s when the valuation bubble started inflation to around 360% today. australian household debt (mostly bound up in home repayment debt) is the highest in the world, and median property price to local income ratios are extraordinarily skewed, especially in melbourne and sydney (respectively around 10x and 12x). outside of hong kong, sydney is now the most expensive city in the world. this is not justifiable given its relatively unimportant position within the global economy.
the bubble kicked off some time in the late 1990s when john howard cut the capital gains tax rate on residential property. it has since skyrocketed lockstep with the massive increases in immigration and dodgy foreign purchases that have occurred over the past 15 years.
the 17% interest rate point is not useful for establishing any point about relative housing unaffordability because it is a static measure and only takes into account interest rates at the time the measure was made; it does not clarify on housing affordability over the full life of the mortgage (nor does it take into account higher required deposits - another substantial hurdle to affordability). while interest rates have substantially declined, principal payments have skyrocketed;
paradoxically the low interest rate is a contributing
cause of the bubble, as it interminably juices demand and specufestor fervor.
the lack of supply is probably a canard: there's
plenty of supply, it just gets snapped up by speculators, foreign buyers and migrants. a genuine housing supply shortage would see corresponding rental price growth in conjunction with property price growth, but this is not the case. and anyway, if there is something to this idea it wouldn't matter; supply gets snapped up by specufestor maniacs, foreign buyers and immigrants. it doesnt matter how much gets freed up if it keeps getting pulled off the shelves faster than you can stock them.
the final suggestion of yours, that somehow exorbitant and divorced-from-fundamentals housing prices is an economic good is just crazy. this kind of unrestrained speculation is not just bad because it impacts upon the young and the vulnerable to purchase property; it massively distorts the economy, diverts investment streams to an ultimately unproductive sector, raises fundamental input costs, drives away valuable economic activity, endangers our natural and built environment and renders us very susceptible to external economic shocks (seriously -- next time the global economy goes kaput we're cooked). all of the main parties, including the greens, are complicit in this nightmare.
