Townsville Housing Not Overvalued
Figures recently released by magazine The Economist have revealed that Australian
housing was the most overvalued in a sample of 20 global housing markets.
The Economist's analysis of "fair value" was based on comparing the current ratio of house prices to rents with it's long term average. By this measure Australia was deemed to be overvalued by 61.1%, followed by Hong Kong at 53.6%.
Craig Allom of Ray White Townsville City said these findings do not reflect the Townsville property market.
"Housing markets are not homogenous. These figures are based on capital city housing prices, which had incredible growth at around 20% in the past year," Mr Allom said.
"At that time, residential property growth in Townsville was in the low single digit percentages."
Mr Allom said the more stable markets like Townsville, have not experienced near the growth of the capital cities in recent times, and therefore Townsville's fair market value is markedly different to these published figures.
"Due to the surprisingly strong growth in house prices in the capital cities, interest rates were on the rise as the Reserve Bank struggled to keep growth under control."
"Thankfully, following 17 months of consecutive growth in the capitals, the direst decline was recorded in June 2010. This may save us all the pain of further rises in interest rates in the short term"
However, Mr Allom said if a grow spike occurs, government intervention may be desirable.
"Earlier this year the Singaporean Government introduced measures to slow house price growth, including deposit requirements and imposing stamp duties on residential properties sold within 12 months of purchase."
"A rethink of how the Government assist first home buyers to enter the market may also be needed as part of an overall policy mix to combat house price growth in Australia"
While growth is a positive and essential part of the property market, Mr Allom said rapid growth can be disastrous.
"No one wants to see a fall in values or worse still a crash, but if growth is allowed to spiral out of control, that is the inevitable outcome."
However according to Ray White New Projects Townsville, any intervention must be focused on the capital city markets, as the regional centres such as Townsville are operating under relatively balanced market conditions.
"If there is a correction in house prices in Brisbane, Sydney and Melbourne, as some commentators suggest needs to happen, Townsville would fair well as we have experienced modest, sustainable growth over the past 18 months.
"The Townsville property market is very solid and resilient and these features will serve property owners well in the long term." Mr Allom said.
Townsville Housing Not Overvalued
By: Craig Allom
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