Disposable income and interest rates driving residential property market
One of the nation's leading financial economists has shown that modern Australian households may have access to more disposable income after housing costs than at any time since 1985.
Writing for Property Observer on December 20, the director of Rismark International Christopher Joye asserted that "after purchasing the dwelling of their dreams and meeting their principal and interest repayments" the average homeowner was financially quite sound.
In his article, Joye discusses the various means by which he was able to discern his findings, stating that "there is no evidence that domestic housing costs have overshot basic measures of fair value".
He says that the main influences on the prices of residential property remain disposable income and interest rates - and that neither of these is currently out of line.
Joye wrote: "By referencing this analysis alone one can conclude that current Australian house prices are comfortably explained by fundamental economic factors.
"We will also see that the average Australian family’s disposable income after meeting all housing costs is actually higher than it has been at any time since our analysis begins."
For investors this piece could help to clear up the debate on how to correctly value a particular property offering based on limited factors.