Australian housing remains expensive by many global measures and prices will rise again in 2014, a global property report says.
International ratings agency Fitch’s “Global Housing and Mortgage Outlook”, published today, compares house prices and affordability around the world by looking at house price/income ratios, house price/GDP per capita, and house price/rent.
“Despite Australian prices being high by all three measures, the market will be supported by continued economic growth, strong affordability following rate cuts by the Reserve Bank of Australia in 2011-2013, and possible undersupply,” the report says.
“We therefore forecast a moderate national increase of 4 per cent.
“This would be considerably less than the 9.8 per cent rise in the 12 months to December 2013, which was largely driven by Sydney, Perth and Melbourne.
“The combination of high house price-to-income ratios and prices that are above the long-term average ratio relative to rents suggests that the potential for further increases in real terms is limited over the next decade.
“This trend is consistent with France, the UK and Canada, which also have high house price-to-income ratios.”
The report notes that while Australian cities appear expensive compared with cities in other countries by house price-to-income ratios, the ratio has been in the same range for a decade.
Fitch expects affordability in Australia to deteriorate in the near term, with house prices continuing to rise more than income levels.
Prices in Sydney, Melbourne and Perth are likely to rise again in 2014; prices in cities such as Adelaide may remain flat.
Fitch’s “Global Housing and Mortgage Outlook” includes forecasts for house price developments, arrears and mortgage lending volumes for 17 countries around the world and compares these trends between countries.
