The IMF released their latest report card on Australia and the Australian economy overnight. It was a report card full of a “can do better” sentiment, and one which highlights that while the economy is transitioning many risks remain.
China, the domestic economy and tighter global financial conditions all got a run. But it was the IMF’s detailed discussion of the state of Australian housing, and whether or not the sector is overvalued and what risks this poses to the economy, which took pride of place in their analysis.
The IMF ran a number of arguments and counter arguments as to the state of housing in Australia, concluding:
House prices in Australia have increased strongly over the past two decades, including by comparison internationally. Thus house prices are often argued to be overvalued. Many counter-arguments have been put forward for why such measures are flawed. We argue that house prices are moderately stronger than consistent with current economic fundamentals, but less than a comparison to historical or international averages would suggest.
Here are the awesome charts the IMF put together on the state of Australia’s housing market.
- Slides 1-6 look at rapid house price growth
- Slides 7-10 address fundamental measures of house valuation
- Slides 11-16 look at macroeconomic and supply factors in house valuation
- Slides 17-22 address financial stability and housing lending standards
- Slides 23-28 look at the financial position of households