Thursday, March 15, 2012

RPData New Capital Markets Report

This is post 1 of several. Capital Markets Report (free registration)
The Australian housing sector is the country’s largest and, arguably, most important asset class. The total value of homes across the country as at December 2011 was $4.54 trillion.
I hope you are not bragging about that. I don't know about you, but I like my most important asset class to increase my productivity.
By way of comparison, Australian equities had a total market capitalisation at the same time of $1.17 trillion.
Hm, I think you might be bragging. This reminds me of Total BC Assessment Surpasses $1 Trillion At that time, British Columbia had a GDP of 191 billion. For a Housing Valuation to GDP ratio of 5.2x. In comparison, Australia has a GDP of $1.57 trillion (USD, according to the CIA fact book), for a ratio of 3.0x. To provide further perspective. The state of California has a GDP equivalent of $1.9 trillion and a total housing valuation of $3.72 trillion for a ratio of 2.0x.
This simple statistic is especially important for Australian banks given that, unlike their peers elsewhere, our banks have the majority of their assets on balance sheet in the form of prime mortgages.
Are you trying to scare us? Because you are. Or are you just explaining why every borrowable share of your banks' stocks are already borrowed and shorted by off-shore hedge funds?
And according to the Australian Bureau of Statistics, more than 60 percent of all Australians own a home – one of the highest rates of home ownership in the world.
This begs the question of who is buying the next house. For those of you who think Canada and the U.S. are higher at first glance. I think the 60% number is per capita. Not owner occupied households. Hence the seemingly lower number. It is not unheard of for Australians living in rental accommodations to own a house or houses somewhere else.
[Some stuff about how mean foreigners are thinking Australian RE is a house of cards and blaming the Euro crisis for scrutiny...]

We don’t subscribe, however, to the predictions that residential housing values are about to show significant declines.
Oh, this is going to be good. 7MB PDF of "it's different here". I can't wait.

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