Australia's Housing Market Over 4 Times Size of Economy, US is Under 2

Congratulations to Australia for having the biggest housing market relative to the size of its economy.

BusinessWeek notes the value of the Australia's homes has ballooned to A$7.3 trillion ($5.6 trillion) -- or more than four times gross domestic product.

Not even the U.S. and U.K. markets achieved such heights at their peaks a decade ago before prices spiraled lower and dragged their economies with them.

“The risk is that it leaves the Australian economy extremely exposed, and a minor shock could become far more significant,” said Daniel Blake, an economist at Morgan Stanley in Sydney.

For How Much Longer?

Rapidly cooling house prices in Sydney and the sudden withdrawal of Chinese investors from the property market may lead the Reserve Bank to cut interest rates, according to investment bank Credit Suisse.

"Over the past few months, the Sydney housing market has not only cooled down, but has arguably turned cold," Credit Suisse wrote.

"Over the past year, Chinese capital flows have fallen considerably, in part reflecting the impact of stricter capital controls.

"This fall foreshadows weakness in NSW housing demand in the year ahead."

Mike "Mish" Shedlock

Comments (17)
No. 1-17
Carl_R
Carl_R

How does this correlate to population density?

WarEagleHB
WarEagleHB

Good point although I doubt either the US or Australia run out of dirt anytime soon

Snow_Dog
Snow_Dog

How does population density correlate to an acceptable standard of living? Define accept however you see fit.

Ambrose_Bierce
Ambrose_Bierce

Our housing boom would look worse if you subtracted government spending from our economy, military, war on terror, foreign aid, all done on the back of corporate tax cuts. How about putting that chart up relative to private economy numbers which is a better comparison?

MIFE
MIFE

Ambrose - not sure I am following. If all of the $$$ weren't wasted on things like war, etc. you mentioned, wouldn't the US economy be even bigger???