THE NEWS WRAP: Report says Australian housing affordability among worst in the world

Melbourne and Sydney have been named as two of the most unaffordable housing markets in the world in a controversial report by research firm Demographia. The organisation’s annual International Housing Affordability report ranks 325 housing markets around the world by comparing income median household income to median house prices.

Melbourne ranked 321st with an income-to-price ratio of 9 times, while Sydney was in second-last spot with a ratio of 9.6 times.

Hong Kong was the least affordable market, while the US town of Saginaw in the state of Michigan was the most affordable.

Banks well placed to survive mortgage shock

Ratings agency Fitch has said Australia’s banks are strong enough to survive a severe meltdown in mortgage markets brought about by a large fall in house prices or bad debts from flood-hit borrowers.

The agency, which modelled the impact on the banks under a mild, moderate and severe collapse in house prices, also looked at the impact of flooding in Queensland on the loan book. Under a worst-case scenario it found the banks could absorb up to $6 billion in losses.

Facebook completes $US1.5bn capital raising

Facebook has raised $US1.5 billion from investors in a private share offering conducted by Goldman Sachs, which officially values the company at around $US50 billion.

While Facebook is now widely expected to pursue a sharemarket float in the next two years, the company has not provided any indication when that might occur. However, Facebook did say it expects to surpass 500 shareholders this year and will start filing public financial reports by April 30, 2012.

Overnight

The Australian dollar opened slightly higher this morning at US98.98c, up from US98.41c over the weekend.

Australian stocks are expected to enjoy a strong start to the week, after markets on Wall Street closed slightly higher on Friday.