Construction not key driver of price boom in Australia
Fitch Ratings said in a new report that housing supply alone is unlikely the root cause of the recent price boom in Australia or the cause of future price correction in contrast to other overseas jurisdictions.
Australian dwellings completed have been in the 1.5 to 2.0 houses per 1,000 citizens range per quarter, showing a stable trend, similar to Great Britain. This contrasts with Ireland and Spain, which both suffered a building boom-and-bust leading into the 2007-2008 global financial crisis. Australia has kept a growth of 0.4 houses per new citizen over the past 20 years, indicating that the ratio between supply and population has remained stable over time.
Fitch has adjusted house-price fall scenarios upwards over time to account for the increased potential of a significant fall in prices. Fitch’s ‘AAA’ market-value declines in Australia range from 45% to 56%. Fitch expects Australian residenjtial mortgage-backed security (RMBS) ratings to withstand any future property price correction, should it occur.