Anyone interested in housing affordability in Australia (as I currently am) could do worse than to read this fascinating piece by economist Steve Keen, who I have sadly only just discovered.

In short: housing is extremely expensive in Australia; we may well be in line for a major correction in house prices; and there appears to be an oversupply of housing, not the oft-cited undersupply.

It’s very interesting to note that for all the talk of how Gen X/Y should just tighten their belts, learn some financial discipline and put in the hard yards to save money if they want to purchase a house, the ratio of income to housing in Australia is far, far worse today than it was in the 1980s, or indeed up until about 1997.  It will be a disaster for the future of the country if an entire generation is talked into excessive debt and then left with houses worth only a fraction of what was paid for them, rising unemployment and rising interest rates.  If that does happen I trust that the real estate institutes, bankers and politicians who constantly talk up the housing market will be the first against the wall.

Similar issues are canvassed in this piece in today’s Age, which is also a good read (and less economics-heavy).