Is Sydney the world's largest debt fueled housing bubble?

We all know that Australia has the 2nd highest level of household debt in the world, a de-stabilising 191 per cent of household disposable income.

Has anyone seen this in the FinRevew today:

Sydney's huge housing investment debt, compared with other Australian cities



With so much debt concentrated in the Sydney property bubble, does this mean Sydney has the world's largest debt fueled housing bubble?

And if so, what is going to happen when the boom turns to the inevitable bust?

 

I think the graph should be at the very least normalised by population, but I am surprised at the difference between sydney and melbourne considering their similar populations-ish.

 

The graph is old. Since then there has been more investor activity in Melbourne than in Sydney.

 

Good point

 

Evidence that it's "de-stabilising"?

No.

It's not a bubble and it won't bust. It's a boom and it will correct like it always does.

 

That will be the Banks problem ,and once you scope down on just the Australia wide %numbers on ppor that are unencumbered it would paint a different picture..

 

Look at those job vacancies!

 

But do those unencumbered PPOR's help either the banks or heavily indebted borrowers balance sheets? They aren't really relevant.

If I'm in a lot of debt, how does it help me that both my neighbours have their houses paid off.

 

I think the point being made is that a speculative debt bubble will burst and the market will crash. How many properties are over leveraged is very relevant to this discussion as is the number of unencumbered properties. Will a handful of forced sales crash the market if a large number of properties are unencumbered and the owners are not forced to sell?

To use your analogy, you are in a lot of debt, interest rates go up and you are forced to sell. That is relevant to you but is it relevant to the market?

 

I think the emphasis on economic inequality is over rated in Australia..

 

The World’s Biggest Real Estate Bubbles in 2021

Ranked: The World’s Biggest Real Estate Bubbles in 2021
Identifying real estate bubbles is a tricky business. After all, even though many of us “know a bubble when we see it”, we don’t have tangible proof of a bubble until it actually bursts.

And by then, it’s too late.

The map above, based on data from the Real Estate Bubble Index by UBS, serves as an early warning system, evaluating 25 global cities and scoring them based on their bubble risk.

Reading the Signs
Bubbles are hard to distinguish in real-time as investors must judge whether a market’s pricing accurately reflects what will happen in the future. Even so, there are some signs to watch out for.

As one example, a decoupling of prices from local incomes and rents is a common red flag. As well, imbalances in the real economy, such as excessive construction activity and lending can signal a bubble in the making.

With this in mind, which global markets are exhibiting the most bubble risk?

 

Hasn’t UBS also been saying Australian real estate is over valued for the last 10 years +?

A quick search indicating 5 - 20% declines in 2018.

https://www.thechainsaw.com/australia-house-price-outlook-ubs-credit-crunch-2018-5/amp

I’m not saying there is no risk etc, but someone with a very poor track record may not be a great source of their analysis.