In the meantime, yields in the form of rent have fallen to just 1.9 per cent.
The price-to-earnings ratio has blown out to 53. That means a $1 million house is returning just $19,000 a year, compared to $40,000 from the poorest fixed-interest deposit.
It means you need an awful lot of capital gain to make the housing investment worthwhile.
There clearly comes a point at which the returns are too low and the expectation of capital gains too unrealistically high, so that people desert housing, or banks refuse to lend or demand their existing borrowers reduce their debt.
The only questions are how soon will that happen, and when it happens will it be sudden and large or gradual and incremental?
Egan and Soos argue that it will be soon, sudden and large, and point to the historical experiences, noting Mark Twain’s point that while history does not repeat itself, it does at least rhyme.
Indeed, they point out the Australian housing bubble is bigger now than those in the 1920s, mid-1970s and late 1980s.
The present housing price-to-earnings ratio of 53 is interesting. The dot-com bubble in the US burst before the ratio got to 53 – it reached 47.2 at its peak. In that market, people expected dot-com stocks to always increase in price, just like Australian housing investors expect lots of capital gains, so they paid more for the assets than their returns suggested they were worth, until reality set in.
An interesting aspect to Egan and Soos’ work is that they take account of the owner-occupier part of the market. The yield for those dwellings is saved rent.
There comes a point at which a person says it is better to rent than buy. You can borrow $1 million worth of capital in the form of a house for rent of just 1.9 per cent of its value. Pretty good deal.

Read more: http://www.smh.com.au/comment/the-housing-bubble-and-the-pin-factor-20140704-zsre1.html#ixzz3HC29hTL0

here in China land cannot be bought it is leased for 70 years - all land in China belongs to the people of China.

You can buy freehold in China having lived there for twelve months..

Can only say what happens here in mainland China .

Foreigners cannot buy property and residents can buy houses of apartments but the land is on lease only - all land is owned by the state collectively.

There is only one government in China and the same laws apply throught China .

Foreign businesses build own or lease buildings but the land is only leased for different periods depending on the industry but the land remails the property of China.

Pete - why not put your money where your mouth is - you said you lived here for a year and stated that land can be bought in China - to Said that the laws in Beijing and Shanghai ate different well how abput a wager .

All land in China remains the property of China and the usual lease for residential homes is 70 years

Phone the local Chinese consul to fimd out.

Solomon - with a name like you chose I expected more brains - see how silly I am .

Most  on this site seem reasonable people but some need to take a look in the mirror - life is to short to be so nasty

Have a nice day

Vivity that is very interesting and understandable most residences in the UK are on leased land as well.

I believed it was just a little missleading to say that non residents of Australia could only buy "off plan" and for that reason they did not compete against residents in the housing market .

Now it is clear that non residents can increase the housing market price because they compete for the purchase of local homes provided they rebuild.

It seems so odd that a nation would sell her land to foreigners when the same property could be leased and remain the property of the Australian people 

Have a great day

peter