Despite house prices across the country recording near double-digit growth in the 12 months to March 2016, Australia has fallen out of the world’s top five locations for house price growth.
According to the latest edition of the Knight Frank’s Global House Price Index for the first quarter of 2016, house price growth in Australia was the sixth best in the world over the year to March at 8.7%.
While still an impressive rate of growth, that annual increase was not enough for Australia to keep the fourth place it had recorded in the previous edition of the index across the December 2015 quarter.
Michelle Ciesielski, Knight Frank’s Australian residential research director, house price growth in Australia has likely entered a more healthy point in the cycle.
“Overall growth in annual capital values has returned to more sustainable levels in 2016 – close to that experienced just over two years ago in the Australian mainstream housing market,” Ciesielski said.
According to Knight Frank, year-on-year house price growth in Australia is still well above the 10-year average of 4.2%, with the lowest recent rate of annual growth recorded at 5.1% in the 12 months to January 2014.
Ciesielski sad factors such as improving unemployment and economic growth combined with the May cut to the official cash rate could help house price growth in Australia pick up again, however conditions won’t rival those of recent years in the near future.
“It is possible we will see a further uptick in investor lending, and modest growth in capital values along the Australian east coast in the coming months,” she said.
“However, it is unlikely we will see price growth as strong as experienced in the peak of mid-2014 and late-2015.”
Overall, house prices grew on average by 3.4% in the 12 months to March 2016 across all 55 markets measured by the index.
Turkey took out top spot, with house prices increasing 15.3% in the year to March, followed by Sweden at 12.9%.
New Zealand took out third place with growth of 11% over the year, followed by Lithuania at 10.5%.
Malta rounded out the top-five with house prices growing 9.9% in the 12-month period.
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