Australia the third most expensive place to buy a house

Australia the third most expensive place to buy a house

13 June 2014 by Andrew Jennings 0 comments

The Australian property market is the third most expensive in the world, according to new data from the International Monetary Fund (IMF).

The IMF's Global Housing Watch, which shows that global house prices have risen consistently over the past two years, has reported that Australia has the third highest house price-to-income ratio in the world, only behind Belgium and Canada.

The IMF fired a shot across the bows of the likes of the Reserve Bank of Australia and the Australian Prudential Regulation Authority, urging them to adopt macro-prudential tools to mitigate banking sector risks, moving from "benign neglect" and taking a range of steps to contain housing booms.

"The tools for containing housing booms are still being developed. The evidence on their effectiveness is only just starting to accumulate. The interactions of various policy tools can be complex. But all this should not be an excuse for inaction," said the IMF. 

"Well above the historical averages" is how it described housing prices in Australia, while its data showed 14 out of 24 developed economies examined still have above-average house price-to-income ratios.  

Speaking to Real Estate Business, Tim Lawless, RP Data's head of research, has explained (see video) that he has some concerns about the rate of growth in some Australian real estate markets showing growth at the moment, warning that value growth is "well and truly outpacing income growth". However, he dismissed fears the market is a bubble fit to burst. 

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The Global Housing Watch, launched this week, is a new website dedicated to featuring its analysis on housing markets across the world. It will provide a one-stop shop for the Fund’s Global House Price Index and other data on housing indicators. 

The IMF said it's a compilation of average housing prices in different countries that allows a global perspective and cross-country comparisons. It also includes charts that provide a benchmark comparison of house prices to incomes and rents. The website will be updated regularly, including through a quarterly report starting in July that will feature other indicators and analysis.

 

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