Australia's housing market may be struggling, but according to an respected analysis by Anthony Richards last week, the Reserve Bank of Australia's resident housing expert, there are several key reasons for being confident that Australian housing prices will perform better than many of other countries.
In the US and Britain property values have dropped 20 per cent or more. But in Australia last year, the fall in average property prices fell only 3 per cent, with the high-end market seeing the larger falls. And according to the respected RP Data-Rismark index, prices were up 1.1 per cent in the two months to February this year.
At the moment housing prices are being buoyed by the combination of the Government's measures to subsidise first home-buyers and rapidly falling interest rates.
Australia also boasts a higher lending quality with higher lending criteria and few sub-prime style loans. This results in fewer arrears on mortgage repayments, less defaults and impaired loans. The big four banks in Australia have also had less exposure than other economies to securities based on sub-prime style loans.
However, the government does concede that unemployment will exceed 7 per cent by the end of the year, which will have influence on the property market. The lower end of the market is thriving, with houses or units under $600,000 in high demand. This end of the market makes up between 80 and 90 per cent of the housing finance market.