The Sydney Morning Herald – 15 January, 2015
By Lisa Visentin
Australia is at the forefront of slowing growth in the housing sector across the Asia Pacific region, with the growth in house prices to slump further in 2015, according to the latest forecasts of a global rating agency.
Although Australia’s housing market is among the most expensive in the world, house-price increases are projected to rise by 4 per cent this year, down from 7 per cent in 2014, a new report from Fitch Ratings has stated.
In a finding that will come as no surprise to buyers grappling with the current housing market, Australian house prices are now rapidly approaching an affordability ceiling, after skyrocketing during the past 18 months off the back of 15 per cent growth.
The news is especially welcome for prospective Perth buyers where growth is expected to flatline in 2015 as the mining boom tapers off. In Sydney and Melbourne, where investor demand has seen growth outstrip other capital cities’ growth, the market is expected to slow by 3-4 per cent.
But while the data suggests the market is cooling, prices are not only expected to remain high but affordability is likely to worsen, Fitch Ratings predicted.
In Sydney and Melbourne,where house prices will continue to outstrip income growth, renting will continue to be attractive relative to buying.
Because of these affordability pressures, the decline in home ownership level from 70.7 per cent in 2000 to 67.5 per cent in 2012 is set to continue, as investor demand increased in 2014. Investor loans currently make up 50 per cent of all new loans.
The findings confirm claims by first-home buyers that they have been priced out of the market by cashed-up investors, with ABS data showing first-home owners fell to an all-time low of 11.8 per cent of the Australian property market in 2014.