Found the above chart at The Big Picture .
Unfortunately Australian Real House Prices are missing but I did a quick calculation using ABS data. From the start of 1997 to the start of 2008, inflation adjusted house prices in Australia increased from a base score of 100 to 212 which places Australia somewhere between Spain and the UK in the above chart. Since 2008 Ireland and Spain’s property prices have fallen significantly whilst, off the top of my head, UK hasn’t fallen so much. However Australian house prices, using my calculations, have increased such that our index score sits around 230.
As a result I’m pretty confident that since 1997 our housing market has experienced the highest real return of the above nations. Jeremy Grantham, of GMO, believes UK and Australian residential property markets are both in bubble territory (or at least very very expensive). Whether you believe that or not, the Australian housing market is certainly one of the key risks to our ongoing economic strength as a nation. Whilst there are numerous reasons provided for why Australia didn’t suffer during the GFC to the same extent as others (regulation, banking strength, etc), I’m sure the strength in our housing market was an essential factor.