Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT tid,hits,start_time FROM biztimes_stats.stats_articles_au WHERE tid='555497' Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT cmt_count FROM ib_articles_counts WHERE id='555497' Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT * FROM ib_sources WHERE id='3001' Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT * FROM ib_articles_options WHERE article_id='555497' Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT article_id FROM ib_topics_index WHERE tid='264' ORDER BY id DESC LIMIT 10Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT article_id FROM ib_topics_index WHERE tid='192' ORDER BY id DESC LIMIT 10Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT * FROM ib_rates WHERE article_id='555497' LIMIT 1 IMF: Australia Ranks 3rd Highest House Price-to-Income Global Ratio - International Business Times

IMF: Australia Ranks 3rd Highest House Price-to-Income Global Ratio

  • Rate this Story
  • 0
  • 0

By Ma Evelyn Castino Quilas | June 12, 2014 2:03 PM EST

After Belgium and Canada, Australia has ranked the third highest house price-to-income ratio worldwide, according to the International Monetary Fund (IMF). 

REUTERS
A row of newly-constructed homes selling for over one million dollars each are pictured in the new Sydney suburb of Greenhills Beach, May 13, 2014.

IMF Global Housing Watch cited the house prices continue to be too pricey for the household income not just in Australia but also in many countries.  This indicator was one of the metrics that the Global Housing Watch tracks in the housing markets around the world. The data generated from the quarterly update of the group was used to assess house valuations.

Other metrics included were global house price index, house prices across the world and house price-to-rent ratio. Of the 33 global countries that have increased the house prices, Australia is one of those countries with very significant increase. In terms of house price-to-rent ratio, Australia also ranks fifth in the countries where house prices are misaligned with rent.

IMF data also revealed Australia is one the countries where house price-to-income ratio and house price-to-rent ratio are way above the historical averages. These ratios are often used as preliminary checks to determine if the house prices already go overboard with the economic fundamentals.

IMF Deputy Managing Director Min Zhu explained the data generated from the IMF Global Housing Watch in a blog at iMFdirect. He said the house-price-to-income ratio is only a general indicator of the housing market. There is a need to gather supplementary information like growth of credit, indebtedness of the household, characteristics of the lender and method of financing.

"As part of its regular reports on economic conditions in countries-the so-called Article IV reports-IMF country teams often provide an assessment of housing markets, and are increasingly paying attention to credit growth, along with several other country-specific features of the housing market. In some cases, this more detailed look suggests much more modest overvaluation than indicated by the house price to income and house price to rent ratios," Zhu noted.

The director also emphasized the importance of housing sector in the country's economy.

He added while the current increase in house prices is a good development, there is also a need to be cautious against another unsustainable boom in the housing market.

Based on IMF research, boom-bust patterns in house prices heralded over two-thirds of the current 50 systemic crisis in the banking sector.

To see the graphical representation of the house price-to-income ratio and other IMF data, please click here. 

Also Read:

e-Government: How Can Australia Become 'Digital by Default'?  [Read]

NASA 'Balloon Campaign' Goes to Australia [Read]

Tony Abbott Mocked in U.S. News Program, Aussies Cringe on Twitter [Read]

To contact the editor, e-mail:

(Photo: REUTERS / Jason Reed)
A row of newly-constructed homes selling for over one million dollars each are pictured in the new Sydney suburb of Greenhills Beach, May 13, 2014.
Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT id FROM ib_slideshows WHERE timestamp>1413960599 AND hits>0 AND outkey='Y' ORDER BY hits DESC LIMIT 10Host 'subweb.ibtimes.com' is not allowed to connect to this MySQL serverSELECT id FROM ib_slideshows WHERE timestamp<1413960599 AND timestamp>1413701399 AND hits>0 AND outkey='Y' ORDER BY hits DESC LIMIT 10
  • Rate this Story
  • 0
  • 0

Join the Conversation

IBTimes TV
E-Newsletters

We value your privacy. Your email address will not be shared.