House prices in Australia are being tipped to stabilise over the next six to 12 months, after posting very strong growth over the last year.
The international estate agent Knight Frank has published its Global House Price Index, which ranks Australia as the fourth-fastest growing property market in the world, behind China, Hong Kong and Singapore.
The company’s research director in Australia, Matt Whitby, says official figures show domestic house prices have increased by 20 per cent in the 12 months to March this year.
“Certainly we’re in the best region – economic growth in the Asia Pacific region is much stronger than the Euro and the Americas – and that’s flowing through to the house price growth,” Mr Whitby said.
“Australia has moved up to being the fourth-fastest growing market out of the 47 that we track.”
But he says the house price increase is not necessarily sustainable because of “rising interest rates in the broader market, the withdrawing of the stimulus and supply starting to pick up now that construction is picking up over the past six to nine months”.
“So you’d expect to see that growth that we’ve seen over the past year start to slow, maybe track sideways, but there’ll still be positive growth on an annual basis over the next six to 12 months,” he said.
Most of the countries where house prices fell were in Europe.
A couple problems are people paid too much for properties they have on books and must cover interest rates much higher than market.