According to the BIS's latest quarterly review of global housing, Australia was the second most expensive market on a seasonally and inflation-adjusted index of advanced economies, behind Norway and ahead of Great Britain and Sweden. Australia scored 200 points, where the base, representing the average of the full sample of countries, is 100.
On a price-to-rent ratio, which assesses the theoretical ability of rental yield to cover mortgage costs, Australia is also among the world's highest-cost housing markets. The Basel-based BIS, which acts as a central bank to the world's central banks, puts Australia's ratio at around 150, which is 50 points above the historical average of the sample group, behind only Sweden, Canada and Norway.
The same goes for the price-to-income ratio, which reflects affordability. Australia comes in at 140 points, just behind highest-rated Belgium but on the same line as Canada and New Zealand.
These metrics, according to BIS, could point to a reversal or moderation of recent growth, or a further sliding in prices. Highly-placed markets on the price-to-income index also looked vulnerable, the BIS said.
"While for most countries the current ratio implies that price movements are not diverging from rental values in ways that imply unsustainability, for a number of other countries current property prices are much higher than those implied by the historical relationship to rents," the BIS said.
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