Fitch Ratings predicts slowdown in house prices of about 4% this year, but also argues that the Australia’s property market remains “among the most expensive in the world on almost all metrics”.
Fitch’s Global Housing and Mortgage Outlook attribute the expected low growth rates to an affordability ceiling and the potential rise of interest rates in the medium term.
It also predicts Sydney and Melbourne prices to increase by 3% or 4%. Prices in Perth are unlikely to move, the report says.
Ben McCarthy, Fitch Australia’s managing director of structured finance, believes the country’s housing affordability has finally reached its peak.
“People just can’t afford to pay much more for housing,” he said. “At 4% growth, prices will still rise higher than people’s incomes. This will be driven by the demand in the market but this will slow over time.”
Meanwhile, the report also saw a constraint in lending this year due to a curb in investment lending and investigation into the use of interest-only loans.
Despite this, Fitch Ratings still gave the country an overall evaluation of “strong/neutral”.