There are many who believed that Australia’s property market would stall at some stage…but it hasn’t. There are always prophets of doom who are keen to tell you that it’s overheated or overinflated and it’s about to burst…but it doesn’t.
Every day millions of Australians and thousands of overseas investors are making serious money as their property portfolios continue to increase in value. Investing in Australian property makes supremely good business sense and the Chinese know it. Chinese investors are snapping up investment property in Australia like there’s not tomorrow.
Brisbane, Melbourne and Sydney are their primary hunting grounds with some interest also in Canberra and Perth. They’re going hard, despite warnings from the Reserve Bank that the property market may be in for a little downward correction at some stage soon. Investment is flooding in from China and other parts of Asia like never before.
So, do we have a ‘housing bubble’ in Australia? Well it depends on who you talk to.
Treasurer Joe Hockey says definitely not, but some economists are a little more cautious. One of the big questions is foreign investment actually driving the prices up?We think the answer is probably yes.
Clearly the low interest rate regime has a fair bit to do with it too. We’ve had cellar level rates for nearly a year and a half now. In that time the price of a dwelling in Australia rose 9.3 percent. The Sydney figures are crazier. In the 12 months to September, dwelling prices in Sydney rose 14.3 percent. Melbourne dwellings were up 8 percent in the same period.
Australians and foreigners alike have embraced the housing boom like never before. The average Australian household's ratio of debt to disposable income has hit a record high.The nay sayers are well and truly outnumbered by optimistic economic heads who firmly believe that this buoyant market scenario is here to stay, and that one of the reasons for its ongoing strength will be the flow of international money.
Chinese investors alone will spend around $5 billion on Australia real estate in this financial year. And most of those investment stories will have happy endings.Malaysian, Singaporean and Vietnamese investment is also on the rise and some savvy operators in Australia are tapping into new markets in South and Central America. At first, those in the Americas are taken aback by the raw prices for Australian real estate as compared to their own domestic markets. It doesn’t take long for them to get on board the money train that now stretches right around the world.
By Mark Parton