Categories
Real Estate Knowledge

Australia: The Market, Policies, and Prospects (2021)

  • Australia had an estimated total of AUD 4 trillion investment from foreign economies
  • Australia’s housing prices had an annual increase of more than 8%.
  • Sydney had the highest property sales among other cities, with a total of 2960 transactions (approximately 1.5 million AUD) as of 19 July 2021

Australia has always been a popular choice for foreign investment. Since it is one of the largest countries with a low population, it ranks among the toppers for having very little pollution and a clean environment. It is also a nation with great landscapes and high-quality life. Given its political stability, It is ranked as one of the safest countries in the world that has an excellent education system. It is also generally considered as a friendly place to live, work or study. As of 2020, Australia had over 7.6 million migrants.

Foreign Ownership

Australia is a major attraction to overseas investors, especially in real estate investment. However, it requires foreigners to obtain a permit from the Foreign Investment Review Board (FIRB) to purchase a property. Foreigners are also limited in buying specific types of properties. Although the purchase process might be a bit complicated, the number of properties owned by foreigners keeps increasing. By the end of 2020, an estimated total of AUD 4 trillion was invested in the country by foreign economies.

According to Knight Frank’s global house price index, housing prices increased by at least 7.3% across more than 50 countries, where Australia ranked 18th with an annual increase of more than 8%.

Global housing prices rose by 7.3% across 53 countries.

Much like other diverse countries, Australia’s real estate industry is highly impacted by foreign investments. Since the COVID-19 hit with the inception of around a year-long lockdown, the number of yearly immigrants has fallen drastically. Surprisingly, Australia’s property prices didn’t drop at all. Amidst the pandemic, they kept skyrocketing even with a daily rise of AUD 1,266 in major cities like Sydney.

The latest data of the Australian property market showed the property sales trends across Sydney, Melbourne, Brisbane and two other major cities. In terms of sales as of 17 July 2021, Sydney was in the lead with 1762 house sales(approx. AUD920k) and 1198 unit sales(approx. AUD660k), followed by Melbourne(2896 total sales) and Brisbane (1608 total sales).

As expected, Sydney’s property values have the highest and fastest growth which is 16.4%. On the other hand, house prices in Melbourne increased by 0.3% in the past week and 10% in the past year; for Brisbane, it was 0.4% weekly and 12% annually. As you can see, the overall housing prices in Australia have increased significantly and are not affected by the pandemic. Therefore, it is a great place for investments.

Residential prices increase drastically from pre-pandemic levels.

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Government Policies

To support and encourage eligible first home buyers to purchase their home sooner, the government has implemented two schemes- The New Home Guarantee Scheme and The First Home Loan Deposit Scheme to the public.

Usually, first home buyers with a deposit of less than 20%, have to pay lenders’ mortgage insurance. However, after the introduction of both schemes, it has enabled first home buyers to purchase with a 5% deposit and singles with a 2% deposit. Property prices may still remain high, but this has definitely made Australian properties affordable again.

Prime Minister Scott Morrison announced The First Home Buyer Scheme.

Prospects

The above factors may have contributed to keeping the local property market stable for more than a year, but experts believe that the Australian property market might break its almost 20 year-long streak of booming prices very soon due to the ongoing lockdown that still has kept the countries’ borders closed. We may end up seeing a peak before there is a significant drop in property prices in the near future. However, it is still rather uncertain. With the introduction of various effective vaccines, the country might one day open up its borders. Once again opening doors to thousands of immigrants, which in turn will revive the market.

Conclusions

Whether or not you choose Australia as the next place to look for an overseas property, we hope these points help clarify what aspects of a country you should be clear about before investing in property. There is no one size fits all answer. For some, the risk of Australian housing prices peaking somewhere in the near future is worth the Australian lifestyle and ease of living, whereas others prefer to wait a bit longer until the prices get just right. Whatever is your preference, Denzity is here to help you make a better decision. Our Portal lists many overseas properties managed by trusted real estate companies all over the world. If there is a place to find your dream home this would be it! Check out https://blog.denzity.io/ to begin your home search!

PS: Special thanks to Denzity’s Research Team for drafting

Now that you’re here…

At Denzity, we help you find your next overseas property. If you have any enquiries about the above properties, or questions about the process, reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.

Disclaimer

Please note all the above stated is opinion only and does not constitute proper investment advice. Denzity is not liable for any investment decisions that result from following the opinions outlined above.


Categories
Real Estate Knowledge

Which One To Choose: Melbourne V.S. Sydney

  • With the pandemic, Sydney house prices will rise 13% more than that in pre-COVID levels by 2023; Similarly, house prices in Melbourne will rise 5% more
  • Melbourne is fast becoming Australia’s biggest city, having an 18% greater growth rate than Sydney

Australia has been a popular destination for foreigners all around the world. It is mainly because of the high quality of life and the low population that allows space for numerous natural landscapes and clean air. Years and years of migration have made Australia one of the world’s most diverse nations with a rapidly growing number of immigrants.

According to Knight Frank’s global house price index, housing prices across more than 50 countries increased by at least 7.3% globally, where Australia ranked 18th with an annual increase of more than 8%.

Australian house prices grow at the fastest rate since 2004.

House Prices in Australia

Even amidst the global pandemic, the Australian property market is one of the few that barely witnessed any decline in the prices, and for major cities, the prices were even higher than usual.

The latest analysis proved that the house and unit prices have gone up by 4-13%. Analysts believe that a Sydney house priced at AUD986K in December 2019 should normally be AUD1119K in December 2023, but now it is projected to be AUD1244K in 2023. For Melbourne, the price may jump from AUD760K to AUD940K in 2023, instead of AUD905K, which means a whopping 24% rise instead of a 19% rise.

KPMG’s report–The Impact of COVID on Australia’s Residential Property Market.

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Melbourne and Sydney are two of Australia’s largest cities that are well renowned globally. Their popularity often leads foreigners to believe that they are Australia’s capital city.

Melbourne’s Property Market

Many argue that Melbourne is a much better choice for investment since it is built around local residents and workers, and has a very high growth rate. On the contrary, Sydney is primarily dependent on tourism and as of 2019, the growth rate was at least 18 % slower than Melbourne.

Some researches showed that, Melbourne property market has been strong for more than 40 years and it is consistently growing. The average house price went up by 7.9% annually, and the rate was 7.73% for units/apartments.

The five types of well-performing properties in Melbourne are: Melbourne houses, Melbourne townhouses, Melbourne units, Melbourne apartments, commercial and industrial properties; these are the main types of properties in existence and it deems that Melbourne is doing good in all these sectors.

Bustling neighbourhood in Melbourne CBD.

Melbourne CBD is said to have much more property development than that of any other places in the larger metropolitan area. Most of these are commercial properties. However, due to the growing population in the area, residential properties (mostly apartments) are likely to rise around 30,000 over the next 20 years. It is to be noted that the majority of these properties are purchased by overseas investors.

The properties near the bayside or the CBD are more likely to be in demand in the future with a great value since those areas have limited amounts of land and are also very close to employment and other important locations.

Our video with Terence Cheung on investing in Melbourne’s property market.

Sydney’s Property Market

A little bit of history…

Sydney property prices have grown more than 400% over the past three decades. A house worthed AUD180K in 1990 had increased its value to AUD870K in 2020.

Sydney is popular among foreigners. The supposed lifting of the imposed border lockdown did give birth to hope for the Sydney property market, however, the recent announcement of the continuation of the lockdown has impacted the sector greatly.

Experts believe that the pricing will increase by more than 16% over 2021, mainly due to the low interest rate of just 0.1%. The value of houses is much higher in the inner and middle-ring suburbs and is continuing to increase due to the growing demand from investors. The beachside suburbs are also likely to perform very well. Some areas worth mentioning would be Byron Bay, the Central Coast, Wollongong, New South Wales, etc.

The Central Coast holiday homes.

Since the Sydney property market has barely seen any decline in price in the past few decades and is continuing to sky-rocket, it is safe to say that “now” is always a good time to invest in a property in Sydney, because the demand and value are not likely to decrease at least in the upcoming years.

Now that you’re here…

At Denzity, we help you find your next overseas property. If you have any enquiries about the above properties, or questions about the process, reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.

Disclaimer

Please note all the above stated is opinion only and does not constitute proper investment advice. Denzity is not liable for any investment decisions that result from following the opinions outlined above.