Australia's house prices second-highest in the world

by Calida Smylie12 Jun 2014
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.


  • by Suspicious 12/06/2014 9:53:57 AM

    Ever looked at the price of property in Singapore , Hong Kong , Shanghai or any other major city in semi - developed countries in Asia ??? They make Sydney prices look like an absolute BARGAIN!!!

  • by Papery 12/06/2014 10:54:38 AM

    "Keeping housing affordable, keep developers building & encourage foreign investment"

    Sounds to me the biggest builder of apartments wants to push the prices up to sustain his profits...affordable for who...pffttt...

  • by Incognito 12/06/2014 10:55:47 AM

    Australia's property market is ill.

    Yet the racket continues.

    Vested interests love it.

    Young families are dying on the vine