The Australian housing market is expected to be among the more stable global markets in 2013 but house prices won’t rise, according to forecasts from credit rating agency Fitch.
Fitch‘s most favourable house price outlooks are for Germany, Australia and the US, which is “finally expected to turn a corner in 2013".
“Fitch expects stable house prices [in Australia] in 2013, although some areas may still continue to decline," says the credit rating agency in its latest Residential Mortgage Briefing.
“Despite the RBA recently cutting the policy rate, home buyers remain cautious and have been deleveraging.
“On a relative scale, the Australian housing market appears expensive, however the combination of house prices falling 4.1% from the peak in quarter 2, 2010 and the RBA cutting the policy rate over 12 months to October 2012 has eased pressure on affordability levels,” says Fitch.
Fitch has an overall "neutral" outlook on the Australian housing and mortgage market and rates Australia alongside Germany as “more stable” compared with peripheral eurozone markets (Spain, Portugal, Greece, Ireland and Italy) where it holds “substantial concerns”.
Australia’s mortgage lending market is also given a favourable mention, described alongside the US prime market as “characterised by relatively low default probability assumptions”.
“In Australia, arrears are likely to remain low, in line with low unemployment and recent policy rate reductions,” says Fitch.
“Australia benefits from a low and relatively stable recent history of unemployment, due to strong global demand in commodities. The recent cut in policy rates aims at stimulating the non-mining sectors of the economy.”
The report notes “relatively high affordability indicators for Australia” which are “largely driven by high average house prices”
It also notes that Australian household debt to income levels have risen significantly over the past decade, but says that a combination of flat house prices and policy rate cuts has eased affordability pressures.