On a global scale, Australian real estate provides outstanding value compared to other major international locations. Here you can purchase a waterfront on Sydney Harbour for under $10 million. In New York and London, and even holiday spots like The Hamptons on Long Island and the Côte d’Azur in the South of France, buyers will routinely pay three times as much.
Today, our property market provides a whole lot more than simply great value – it has also become arguably the safest and best performing residential market in the world.
While other major property markets have suffered significantly due to the GFC, Australian property values lost just 3.8 per cent from peak to trough during the eye of the storm last year. This looks pretty rosy compared to losses of almost 25 to 40 per cent in the UK and US and 30 to 50 per cent across Asia since the sub-prime drama began in 2007.
This year, our market is flying with better than expected gains of 7.9 per cent across the board since January. In August alone, Australian property values rose by almost two per cent, the largest monthly rise since the RP Data-Rismark National Home Value Index was launched in January 2005.
Melbourne is the stand-out at 11.6 per cent, followed by Darwin (9.7 per cent), Sydney (8.6 per cent), Canberra (6.7 per cent), Brisbane (5.2 per cent), Perth (4.1 per cent) and Adelaide (3.1 per cent).
One of the key differences between Australia’s residential property market and those of other major developed nations is supply and demand. The US has way too much property available to the small number of buyers brave enough to venture back into the market. In Australia, we have a shortage that is now estimated to be around 200,000 homes.
The other differences are the strength of our financial sector and general economy, our record population growth and our better than expected unemployment rates.
And things are only going to get better for us. The International Monetary Fund (IMF) says we’re likely to be the only advanced economy in the world to record real GDP growth this year – around 0.7 per cent and rising to two per cent next year. Its average projection for all advanced economies is minus 3.4 per cent in 2009 and 1.5 per cent growth next year. This is powerful.
We’re often referred to as the ‘lucky country’ but there’s a lot more than luck making our property market run hot. As we move towards the end of 2009, my outlook for 2010 remains extremely positive. The most interesting element will be the impact of investors – this important pool of buyers can make the difference between a good market and a booming one… and investors are definitely coming back to real estate.