The research from the OECD has shown that Australia had the second-highest mortgage debt in 2020, a little more than 90 per cent of GDP, trailing only Switzerland’s total of almost 120 per cent of GDP.
For mortgage cost burden, shown through percentage of disposable income, Australia came third, at 20.3 per cent, behind France (22.3 per cent) and Luxembourg (24 per cent).
Australian prices also rose at the fourth-highest rate across the OECD, from 2000 to 2017, with New Zealand seeing the fastest rise.
The nation was on the high end for house price to income ratio, where it had a figure of 16.27, in contrast to the OECD average of 10.42.
But Australia’s property boom has been somewhat consistent, with house price volatility from 1990 to 2019 scored 6.77 being more muted than the OECD average of 7.61.
“House prices in Australia have indeed continued to rise steadily in recent years, in response to strong population growth that boosted housing demand and was not adequately met by new housing supply,” the report noted.
“Restrictive land-use governance criteria that depend on too many categories and excessive prescription on allowable activities have played a role in limiting housing supply.”
Australia’s price-to-income ratios, however, are projected to keep rising, alongside New Zealand, Denmark, the UK, and Luxembourg and Sweden, where more substantial growth is expected.
Housing investment is also high in Australia, compared with its OECD peers.
The OECD has called for governments to address housing affordability issues, noting rising prices and “historically low levels” of public investment.
There are four priority areas outlined in its new report: unlocking additional supply, land-use reforms (such as abolishing overly tight building restrictions), greater flexibility in regulations over landlord-tenant regulations, and applying environmental standards.
[Related: House price rise jeopardises economy]
Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.