Apartment prices in the luxury beachside Australian town of Noosa Heads have tumbled by a fifth since 2008 as cracks emerge in a housing market that has so far escaped the rout seen in the United States, Britian and Ireland. The mediul apartment price in the tourism and retiree town 150 kilometers north of Brisbane has slumped 21% in 3 years to A$570,000.
It is a very overvalued housing market and even a small adverse shock can be magnified by a rage adverse impact on property values. Australia’s housing is the most overvalued in the world. The country had the most unaffordable homes among the English-speaking nations, with the Gold Coast and Sunshine Coast markets near the top.
The housing price index of Australia’s eight capital cities has gained 15% since the first quarter of 2008, according to the Australian Bureau of Statistics. Prices gained 16% in Sydney and 26% in Melbourne. Median prices across Australia’s 8 capital cites were flat in February at A$459,000.
More than a tenth of borrowers said they would find it hard to repay their home loans if the central bank raises interest rates by a quarter percentage point, and almost a quarter would struggle with two increases.