NEWS
Predictions last year that Australia's property market would follow international trends and be devalued by billions of dollars created two distinct camps: aspiring home owners who hoped the slump would open the door to their dreams; and existing home owners who feared they would be tied to mortgages worth more than the roof over their heads.
But the result is that the correction of Australia's overpriced property market - the International Monetary Fund says it is up to 20 per cent too high - has not happened.
Local house prices rose 4.2 per cent in the June quarter, meaning they are now only about 1.4 per cent below what they were a year ago.
In the US, house prices have crashed by more than 17 per cent in the past year, and by about 32 per cent since mid-2006. In Britain, house prices have fallen by 11 per cent in the past 12 months. The fall in housing prices in the US and Britain has been blamed on rising unemployment and a lack of early government intervention. In Britain, nothing was done to stimulate the housing market when the global financial crisis hit because house prices were already too high.
Senior Australian economist Saul Eslake says house prices here will remain high unless more homes are built because demand exceeds supply.
Source: theage.com.au
Published: 23 August 2009
