Latest NewsImf Says Australian House Prices Not OvervaluedThursday, 06 October 2016

Australia is unlikely to experience a major correction in house prices given the impact of long-term migration on demand, according to the International Monetary Fund (IMF).

In its world economic outlook, the IMF said that after taking long-term migration into account, there was insufficient evidence to suggest Australian house prices were significantly overvalued.

Despite long-term price-to-income and price-to-rent ratios being "well above historical averages", particularly for Australia, the IMF said demand would moderate any price decline.

The IMF also said a correction in house prices in Australia was "close to complete".

The report follows the release of RP Data-Rismark's monthly index for August earlier this week, which showed Australian home values rose by 1.9 per cent during the month.

CommSec chief economist Craig James said the price rise showed housing supply was not keeping up with growing demand.

"Demand for homes is being spurred by super-low interest rates, the fastest population growth in 40 years and grants to first home buyers," Mr James said following the release of the index.

"At the same time, Australia continues to experience an under-supply of homes through lack of building over recent years."

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