Real Estate Market in Australia

The Australian housing market went into freefall from 2018 to early 2019. Not only did they fall, they fell at an increasing rate for a whole year. This was possible due to the restrictions on lending in the real estate market. The rise in the inter-bank Bank Bill Swap Rate put pressure on the big four banks to follow small lender in increasing mortgage rates. As you can imagine, the mix of booming house prices with a sudden increase in repayments can cause a huge systemic crash.

The result of this, mixed with a natural bounce-back after a crash, has meant the property market is booming again. Of course though, you can’t help but think the bigger the boom, the bigger the crash. We’re now in a situation where property prices are rising, and many want a piece of the action, but it’s a little too soon to get carried away. Rising prices are great, but volatility is not. It may be best to wait a little longer for the dust to settle. However, those who do not need mortgages may feel like now is a good time to benefit from the rising prices, without having to worry about the inevitable future interest rate increase.

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Melbourne, which is one of the largest Australian cities, has been the most expensive place to buy a home since 2015. The city experienced a huge boom in luxury houses and saw exponential gained right up until the last possible point of the 2018 crash. It then fell by around 20%. Only Sydney experienced similar levels of price decreases.

However, now that the crash is in the past, it’s now Melbourne and Sydney that are experiencing the fastest growth again. These are clearly the cities that benefit the most from a boom, but crash the hardest, which makes sense.

Brisbane, Canberra and Hobart were certainly the most stable throughout the crash, and continue to be solid. In fact, Hobart never declined at all – it’s been continuous growth since 2012. These are still incredible cities for expats, with Canberra of course being the capital city.

With the market now soaring again, not all homes are affordable for the average Aussie or expat. There are still some affordable areas in Australia though, even in cities like Melbourne. For example, Epping, Sunshine, Casey City and Dandenong City, Logan City and Ipswich are all in Sydney, and are more affordable than the city center.  

The Australian real estate mortgage rates are often thought to be affected by the US interest rates. The US seem to have indicated that interest rates will remain unchanged in 2021. This is good news for the Australian real estate market, along with there being no indication so far of rising rates in Australia. In fact, Dr Philip Lowe, governor of the RBA, hinted that interest rates may get cut again in 2021. This could mean that the Australian housing market has the potential to quickly regain its 2018 losses fully. This is certainly good news for those looking to buy a house Down Under.

Australia is an incredibly diverse place. There’s plenty of foreigners, relatively liveral laws and a general feeling that anyone can succeed. Even for those turning up with no experience or skills – the minimum wage is $19.49 AUD, which is a very high amount relative to the global average. English is the native language, which also makes things like getting a job easier for most of us. On top of this, many industries are exploding there, meaning there’s plenty of high-paying job opportunities.

Australia is continuously voted as one of the safest countries to live in, beating countries such as the UK, USA, Netherlands, Finland, Sweden, France, Spain and many others. As a result of its high standards of living and safety, life expectancy is an incredible 82 years on average. Australians also enjoy having a higher-than average disposable income, as well as an average higher income to debt ratio. In fact, inequality is much better than the US for example. 

The most dangerous thing in Australia may just be the nature. Its climate is as beautiful as it is brutal (if you’re not prepared for it), and some dangerous insects and animals. The risks of these become mitigated as you become more experienced with living there.

Of course, there’s currently a tragic event occurring in Australia. There are bush fires in most corners of Australia, covering 10 million hectares. This event has killed 30 people and remains on-going. Of course, the cities are safe from this, but if you were to look at buying a house in a remote, rural place in Australia, it is important to research historical fires as some places are prone to them.