The major international ratings agency, Fitch Ratings, has made a prediction that Australian home price growth will slow down, claiming that the country has hit an “affordability ceiling”. The agency predicts that the Australian housing market will grow by four percent over the course of the year, down three percent from last year.

Last week, the company published its annual Global Housing and Mortgage Outlook report. In it, the ratings firm found that Aussie homes were the world’s third most expensive in terms of both rent and comparison to income. In an attempt to explain the findings, the company addressed the market’s insecurity head-on.

“Australian property remains among the most expensive on almost all metrics,” the report stated. “With almost 25 years of continuous GDP growth, record low rates and stable unemployment, Fitch expects Australian prices to remain high and affordability likely to slightly worsen in the near term before levelling off as it reaches an affordability ceiling.”

The report also found that price growth had increased by nearly 399% since 1997. In terms of value and growth, Australia rated third behind only South Africa and Brazil, both of which are developing countries currently in the midst of an economic boom.

Other good news gleaned in the report include the fact that Australia has the highest level of mortgage prepayments anywhere in the world. This overwhelming success can be attributed to a stable banking sector and flexible mortgage systems. Additionally, our general home ownership rates are still high, even if they did drop by a few percentage points to nearly 68%.

All in all, Australia’s housing market has been given another passing grade by the assessors over at Fitch. Though the long-term outlook is a little gloomier, it seems Australians can still expect the best from tomorrow. And that really is good news.


 

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