Editor's comments:
Last year I warned of real estate bubbles about to burst around the world including Bali's southern neighbours of Australia and New Zealand and even my home country of Canada.
Now the writing is on the wall and many analysts are agreeing with my predictions.
You don't need sophisticated spreadsheets to determine whether a market is a good investment or not simply use my tried and true acid test for real estate.
If I can't find the apartment or a home in in any real estate area in the world that does not provide positive cash flow with 80% occupancy the market is usually overbought and prices will drop.
Get ready for huge drops down under in the near future.
Australia is one of the most likely countries in the world to clock property price falls, a new ranking shows, after prices boomed over the past two years.
Property prices are high compared to rents and incomes, the Bloomberg Economics research found, although local experts caution prices will not necessarily drop far enough to get back in line with fundamentals.
Australian property prices are at risk of a correction.Credit:Louie Douvis
Australia ranked fourth in the OECD for the risk of a property price correction, behind New Zealand in first place and just ahead of Canada in fifth, two other countries where property markets have been hot for years.
Central banks around the world, including Australia, cut interest rates to support economies during the pandemic, allowing buyers to borrow more and pushing property prices higher.
As economies recover, interest rates are going up and property markets are starting to slow.
In Australia, the largest cities are driving the downturn. Sydney home values are 1.4 per cent lower than three months ago, while Melbourne is down 0.8 per cent over the last quarter, on CoreLogic data.
Countries with the highest property risk
Five gauges of property risk for OECD member and accession countries
| Price-to-rent ratio |
|---|
| 1 | New Zealand | 156.8 | 143.9 | 27.6% | 23.1% | 1.5% |
|---|---|---|---|---|---|---|
| 2 | Czech Republic | 169.7 | 140.9 | 25.8% | 20.2% | 2.4% |
| 3 | Hungary | 160.5 | 131.4 | 19.5% | 11.2% | -0.5% |
| 4 | Australia | 141.5 | 119.7 | 23.7% | 21.1% | -3.3% |
| 5 | Canada | 154.9 | 143.0 | 17.6% | 12.2% | -4.7% |
| 6 | Portugal | 156.0 | 146.8 | 11.6% | 9.4% | -2.0% |
| 7 | US | 139.2 | 135.9 | 18.7% | 11.7% | -2.5% |
| 8 | Austria | 134.1 | 140.9 | 14.9% | 11.9% | -1.3% |
| 9 | Russia | 157.6 | 99.8 | 22.8% | 11.6% | -1.4% |
| 10 | Luxembourg | 166.5 | 143.7 | 12.1% | 8.2% | -5.7% |
| 11 | Netherlands | 148.8 | 137.8 | 16.7% | 7.8% | -3.3% |
| 12 | Germany | 147.6 | 135.9 | 12.2% | 7.2% | -0.9% |
| 13 | Sweden | 129.2 | 116.3 | 11.1% | 8.0% | -1.2% |
| 14 | Switzerland | 121.7 | 121.2 | 8.3% | 7.0% | -1.7% |
| 15 | UK | 126.8 | 120.1 | 10.5% | 6.0% | -4.1% |
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