Aussie house prices driven up by 'scarcity of land'

Thursday 16 December 2010

Article by Mozo

Housing supply problems are continuing to drive up property prices in Australia, an International Monetary Fund (IMF) report has found.

Aussie house prices driven up by 'scarcity of land'

The study also points to the "increasing scarcity of land" in main urban areas and rising population pressures as factors that are driving up Australian house prices.

According to the report, which was obtained by the AAP, such factors mean that house prices could be overvalued by as much as ten per cent.

Increasing affordability problems have prompted many Aussie property buyers to compare home loans in search of the best options, particularly following last month's interest rate hikes.

The AAP noted that over the past 20 years, house prices have increased by almost 120 per cent, adding that they have already recovered to a level seen before the onset of the global financial crisis in 2008.

Among the IMF report's other findings, it stated that Australia's strong global terms of trade and commodities boom would continue to support the housing market.

"Strong population growth and high real income growth in the wake of record-high commodity prices this year will continue to support house prices," said report authors Patrizia Tumbarello and Shengzu Wong.

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