Australia: the world's second-most expensive housing market

By |
The International Monetary Fund has warned central bank officials to beware of house prices after concluding Australia may have the world’s second-most expensive housing market, behind Belgium.

The IMF said the comeback of property inflation could result in a repeat of the 2008 financial crisis, and warned policy makers at the Reserve Bank of Australia and the Australian Prudential Regulation Authority to avoid “benign neglect” of house prices.

Prices have climbed in 33 of 51 countries monitored by the fund over the past year – with the most growth in Hong Kong, followed by New Zealand, China, Brazil, Germany and the United Kingdom.

The IMF concluded property booms and busts were implicated in two-thirds of the past 50 banking crises.

Australian weighted average capital city median prices have increased over the last quarter by 1.9%, according to a report released yesterday by Bendigo Bank and the Real Estate Institute of Australia.

Among 24 countries, Australia has the second-widest gap between the ratio of house prices to incomes and the long-term average; and the fifth widest spread in price-to-rent ratios, the IMF said.

But to be sustainable, house prices, rents and incomes should move together.

“In the long run, the price of houses cannot stray too far from people’s ability to afford them,” the IMF said.

The IMF argued for macroprudential tools to be implemented – however, an RBA top official said last week this will not happen in the near future in Australia.

Meanwhile, Australia’s largest apartment ­developer, Harry Triguboff, has said foreign investment is crucial for Australia’s housing market to survive.

Triguboff’s Meriton Group made a submission to the House of Representative Economics Committee Inquiry into Foreign Investment in Residential Real Estate, which supported current regulations.

“If Australian wishes to keep ­housing affordable, and to keep ­developers building, it is imperative that we embrace foreign investment in real estate and the certainty it can bring to the industry,” Triguboff wrote.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Top Suburbs : berala , mt colah , glendenning , collingwood , west rockhampton

go back

Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here