Australia Points The Way for UK House Market

In recent months we have highlighted developments in Australia, another economy whose very rapid rates of house price growth in recent years appear to have left its housing market significantly overvalued and vulnerable to a correction.

The most recent data show that developments in Australia continue to mirror those in the UK, with further evidence that house price inflation is falling. The latest house price data show that prices edged lower in the second quarter of 2005, albeit only by a marginal 0.1%q/q. Nevertheless the modest decline in prices was sufficient leave Australian house prices 0.1% lower than in the same period a year earlier. Australian house price inflation has only previously been negative in two quarters since 1987.

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