How Aussie home price rises compare with rest of world

Growth in Australian home prices exceeded many of the world’s biggest economies this year, but there was one country where prices increased by a jaw dropping 89 per cent.

Sydney remains the second least affordable housing market in the world.

Australia has climbed into the ranks of the top 20 countries with the fastest rising home prices this year.

Prices across the country rose by 4.9 per cent for the year, which put it in front of larger economies like the US, Canada and Italy, according to the latest Global House Price Index by Knight Frank.

Average annual price growth across the global market was 3.5 per cent in the year to October.

Australia’s growth put it at 18th on the list of biggest price rises and the second highest in the Asia Pacific region behind Japan.

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Some of the fastest rises globally were in Balkan countries Croatia, Greece, North Macedonia, Bulgaria and Slovenia, where growth in home prices averaged 7.4-13.7 per cent annually.

But the steepest rises by far were in Turkey, where home prices jumped by an average of 89.2 per cent for the year.

Price rises were rampant in Turkey.

It’s understood that Turkey’s massive rises were the result of rampant inflation, which in turn has driven many Turkish citizens to invest in real estate as a hedge against inflation.

Among the 56 markets Knight Frank monitored, 35 experienced annual price growth, while 21 had price declines.

Home prices soaring despite central banks hiking interest rates was something of a theme in much of the world, Knight Frank noted.

The group attributed growth in prices in many countries to “limited available stock” – a problem that has also plagued Australia following sluggish construction and increased migration.

Liam Bailey, Knight Frank’s global head of research, said listings shortages may continue for many countries into 2024.

Australian home price faster than those in the USA.

“The big issue for housing markets in 2024 will remain low market liquidity, with sales volumes down by up to a quarter compared to their recent peaks – only a shift to lower interest rates will lift sales activity.”

The biggest price falls were recorded in Sweden (-11.1 per cent), Slovakia (-10.1 per cent), Finland (-9.6 per cent), and Hong Kong (-8.7 per cent). Some of these countries were tackling recessions.

Knight Frank head of residential Erin van Tuil said there were competing forces in the Australia market.

“In Australia, on one hand, this is the ideal opportunity for first home buyers to enter the market, but overall numbers are down,” Van Tuil said.

Interest rates have been rising in many countries, including in Australia, where RBA governor Michelle Bullock announced another cash rate rise in November. Picture: Martin Ollman

“Many have seen their deposit absorbed by rental growth, the overall cost of living and/or they’ve been unable to prove serviceability of the loan required to be borrowed.

“On the other hand, there are a significant portion of cash buyers such as the growing number of downsizers itching to make their low maintenance living a reality.

“This pent-up demand, plus those currently less active in the market, including families seeking to upsize, and those much-required investors to keep weekly rents at bay as our population grows, will place further pressure on capital values across the country in the coming years.”

A Demographia study published earlier this year indicated Australia was the least affordable housing market in the world behind New Zealand.

Among cities, Sydney was the second least affordable market – measured by the gap between prices and wages – while Melbourne was ninth. Adelaide was 14th and Brisbane was 17th. Hong Kong was deemed the world’s least affordable housing market.

Originally published as How Aussie home price rises compare with rest of world