Australia a 'boomtown' compared to US

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The Australian housing market is a "boomtown" compared to the United States, RP Data has claimed.

The company's latest Property Pulse has pointed to continued declines in US home values, where nearly one-quarter of loans are in negative equity. However, both Australian and the United States are experiencing lagging demand, with transaction volumes in the US 33% below five-year averages and Australian transaction volumes 16% below five-year averages.

RP Data research director Tim Lawless said the US housing market may see a boost from the recent Federal Reserve announcement that rates will remain on hold for at least the next two years. Lawless commented that the Australian market has no such guarantee of stability.

"The certainty around US interest rates is in direct contrast to the Australian mortgage market where the direction of interest rates over the short to medium term still seems to be up in the air," Lawless remarked.

Australian mortgage holders are also more sensitive to interest rate movements, Lawless said.

"The vast majority of Australian mortgages are on a variable rate. This means that any change in the interest rate environment has an immediate impact on most mortgage holders and consumer behaviours," he commented.

Though there are significant differences between the two markets, Lawless said the Australian housing market would be well served to learn from the US market.

"The mortgage market meltdown in the US has resulted in a greater level of data transparency, which is a good thing, and potentially one way in which the Australian economy can learn from the changes now being made in the US," he said.

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