| Australia Residential Property Market |
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The Australia residential property market remains vulnerable to global financial market turbulence and economic downturn. Despite Australian's fondness for the residential property, the market has slowed in recent months. However, two steps implemented by the government, namely cutting interest rates and increasing first home buyer grants, are aimed at maintaining the strength of the Australia residential property market. The following is an overview of the market and opportunities for international entrepreneurs and investors:
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1.
| The Australian residential property market has been a reliable and strong source of investment return in the face of all the talk of ‘bubbles’ in the Australian market. According to ANZ since 1984 residential property has seen compound annual returns of 13.4%, which is only marginally below equities which stood at 13.8% and above Bonds which was only 9.4%.
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2.
| Within the Australian residential property market, each of the states and territories have unique attributes. At the end of last year Sydney had the highest median house price of any Australian capital city at A$551,000 (US$364,000). It may be one of the world's most livable cities, but Sydney is now one of the least affordable, ranking at 13th in the list of most expensive cities in the world according to Global Property Guide.
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Source: Property Council of Australia, REIA, ANZ Economics and Markets Research | Source: RBA, ANZ, ABS | |||
3.
| According to ANZ's Property Outlook 2008 report, despite a stall in house prices during the first half of 2008 there is not significance evidence of falls in the market.
Factors such as tight supply, increasing rents along with the recent tax cut from the Reserve Bank of Australia (RBA) and first home buyer boost will help to maintain the strength in the Australia residential property market. Charts to the right indicates declining vacancy rates and the start of predicted interest rate cuts. | |||||
4.
| Australian real estate prices are rising as the availability of housing continues to remain tight, the Real Estate Institute of Australia states. Prices have actually risen sharply by 3.7% percent in 2009.
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5.
| Recent sharp falls in the $A will boost
international interest in the Australia residential property market. Apart from international investors, the changing A$ value may attract Australian expatriates back to Australia who along with the extra cash can benefit from other recent economic stimulus from the government such as reduced taxes.
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6.
| The charts to the right, from ANZ & ABS, show Brisbane and South Australia had outperformed the Australia average house price change during 2007. Major projects in mining and ship building in South Australia could help to further boost its economy and underpin the property SA property market for years to come.
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8.
| In Western Australia, the state population grew by 2.4% in 2007 which was the fastest of any state. This growth is increasing the demand for housing and, hence, reducing the vacancy rates. Despite a 2.4% drop in the median price in WA for the June 2008 quarter WA has experienced significant growth in the past 5 years. | |||||
9.
| In summary, the slowdown in economic growth and uncertainties regarding financial markets is resulting in a decline in the growth of the Australia residential property market. However, recent government policy implementations and a net migration into Australia should help to maintain housing demand and the property market.
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10.
| In Victoria, rental vacancies fell to their lowest levels in 25 years and further reduction is expected as
underlying housing demand continues to outstrip
dwelling completions. Despite 23% increase in house prices during 2007, the ANZ report indicated prices stalled in first half of 2008 and are expected to remain subdued.
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11.
| According to the 2009-2012 Residential Property Prospects report by BIS Shrapnel, average house prices in the Australia residential property market are forecast to rise as much as 22%. Among the capital cities, Sydney, Melbourne and Adelaide are forecast to show the strongest price growth at 19% over the next three years. | |||||
12.
| A great increase in demand is contributing to price increases in the Australian residential property market. Though a major factor, this is not the sole reason for the increase. The increase is more likely due to a combination of attractive first home buyer grants from the government, low interest rates, poorly performing share markets along with the tight rental markets seen in most of the cities.
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| Contact Us | ||||||
For more information on the Australia residential property market, call us in Sydney at +61 280 147 568 or contact us at email@healyconsultants.com
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