House prices in Australia’s biggest cities have been on a tear. In the financial capital, Sydney, they’ve risen 75 percent over five years, ranking it second only to Hong Kong as the world’s least affordable housing market. As in global cities from London to Vancouver, the property boom has increasingly pushed the traditional norm of home-ownership beyond the reach of average earners. Residential property accounts for 40 percent to 60 percent of loans by the major banks, making house prices a matter not just of politics but financial stability.
The "lucky country" notched a 25th consecutive year of economic growth in 2016 after swerving significant fallout from the 2008 global financial meltdown, thanks in part to China’s demand for its abundance of minerals. Also, Australia’s immigration system has weighted population growth toward skilled working-age migrants who’ve brought in wealth from offshore. All this at a time when interest rates plummeted to record lows and are forecast to stay there at least through 2017.