Fitch quashes housing oversupply fears

Adam Smith 1 December 2016 NEWS

building houseAustralia’s level of housing construction is not excessive, the global credit ratings agency has said.

Analysis by Fitch Ratings has claimed that new home construction in Australia has not reached excessive levels, the ABC has reported. The findings come amid widespread industry warnings of a looming oversupply of apartments.

While Fitch said Australia is building slightly more housing than warranted by underlying demand, the credit agency said the level of overbuilding was far below that in countries like Ireland and Spain.

The Fitch analysis found Australia is currently constructing 0.57 homes per extra new person added to the population. By comparison, home building in Spain peaked at two new dwellings per person added to the population, while Ireland peaked at a one-for-one ratio.

The ABC reported that current new home construction levels translated to one house for every 1.75 people, compared to the long-term average household size of 2.6 people.

"The increase has not reached levels seen in Ireland and Spain during their building booms, prior to the onset of the global financial crisis in 2008, when their ratios were up to four times the levels in Australia," Fitch analysts James Zanesi and Hai Duong Le said.

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