Australia’s property market more affordable than New Zealand

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You may find it hard to believe, but Australian properties are in fact more affordable than their Kiwi counterparts.

According to the latest report from Knight Frank Global Opportunities Index, Australia came in fifth in the most unaffordable scale, well behind Belgium, which is deemed most overvalued, Norway, Canada and New Zealand.

The report deems a property market to be correctly valued when local incomes are high enough to buy or rent an average property, and when average house prices are running close to long-term average levels. 

Knight Frank’s Michelle Ciesielski said that Australia recorded slightly over 20% in the price-to-income ratio while the price-to-rent ratio almost reached 40%.

The market’s price growth reflected an increase in market confidence – thanks to low interest rates, more liquid debt markets, and a strong rebound in the share market which contributed to a growing pool of prestige residential buyers.

Vendor discounting had lessened as confidence returned which, in turn, contributed to increasing prices, Ciesielski said.

There had also been an increase in demand from Asian buyers for prestige residential properties, which was helping to fuel prices, she added.

“With restrictions on property purchases across much of Asia now in place, cashed up investors are likely to look further afield, and Asian cross-border investors continue to favour traditional or ‘safe haven’  city markets, like Sydney and Melbourne.”

The report also identified Australia as one of the countries where prices were still rising and, thus, most at risk of a price correction.

However, Ciesielski said that while the country’s mainstream property prices had witnessed growth over the last quarter, the growth had been much softer than in the previous twelve months.


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