Australian housing bubble 'yet to burst'

The public policy group Demographia says a comparison of median house prices with median household incomes in Australia, Canada, Ireland, New Zealand, Britain and the US found Australia has the most cities in the "severely unaffordable'' category - where house prices are more than five times the median income.

The Sunshine Coast in Queensland is the least affordable.

The Gold Coast came third, behind Honolulu, and Sydney was fifth, behind Vancouver. Melbourne and Adelaide were equal 12th and were still less affordable than New York (14th), London (16th) and Dublin (32nd).

Demographia says affordability in Australia is worsening relative to Britain, Ireland and New Zealand, where prices have recently collapsed.

Australia will be next, it said.

But an economist for CommSec, Savanth Sebastian, says falling interest rates and the first-home buyer's grant will help keep prices steady.

"We are not going to see dramatic falls this year,'' Fairfax newspapers quoted him as saying.