Real Estate Market in Australia

Those looking to invest in real estate in Australia will be ecstatic to know that the property market in the country has witnessed astonishing growth. This could be attributed to government stimulus and record-low interest rates.

The residential property prices index report by the Australian Bureau of Statistics states that the total valuation of the 10.8m homes in the country increased by $2tn to a record-breaking $9.9tn last year. 

In 2021 alone, residential property prices reached 23.7% in a span of 12 months — the strongest annual growth on record.

And with its spectacular landscapes, vibrant culture, and dynamic yet friendly and relaxed cultures, Australia is considered among the best countries to live in. In fact three of its cities — Adelaide, Sydney, and Melbourne — rank among the world’s top 10 cities to live in.

However, if you’re thinking of settling in the land Down Under, you may need to reconsider more than just finances. But, despite the softening price growth and hikes in interest rates since nearly a decade, property sellers in Australia are confident.

Let’s look at the history of the Australian housing market, and determine where it’s heading, so you have a clearer vision of what you’re in for.

Property Prices Bounced Back

The Australian housing market took a downward marketing spiral, falling at an increasing rate from 2018 to early 2019 due to the restrictions on lending and an increase in the inter-bank Bank Bill Swap Rate that led to an increase in mortgage rates.

To make matters worse, the pandemic hit, and property prices fell further by 2.1% between April and September 2020. Thankfully this didn’t last long. According to the latest PropTrack Listings report, the first quarter of 2022 was the busiest in eight years when it came to new real estate listings.

Latest reports say that properties for sale across the country are flying off the shelves even as property prices rise. And as prices continue to soar, buying a home has become a matter of “now or never” for many.

Leading real estate experts suggest that the market will reach an equilibrium later this year, so if you’re looking to move to the country and buy a house, it’s time to get started!

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Which Cities Are Booming?

Among Australia’s largest cities, Melbourne remains the most expensive place to buy a home, a tag it’s been holding on to since 2015. Despite that, the property market in Melbourne had a strong first quarter for new listings since 2011. Sydney is another city that is also experiencing fast growth. But what one needs to remember is that cities that benefit the most from a boom are also likely to crash the hardest.

Which Cities are the Most Stable?

Brisbane, Hobart, and Canberra were among the top contenders to remain stable throughout the crash, and they continue to go strong. They are great cities for expats looking to invest in property.

Other cities that are preferred investment hubs include Sydney, Melbourne, Adelaide, and Perth.

Affordable Alternatives

The surge in property prices in Australia does make it difficult for homebuyers to get their foot in the door. Places like Canberra, Melbourne, and Sydney have all cracked the $1 million median house price mark making it difficult for interested buyers to secure a home here, despite the many incentives available.

However, there are still affordable locations where the average Aussie or expat can purchase a home. This includes areas in less popular cities or suburban localities like Greenfield Park, Blaxland, Hastings, Cranbourne North, Holden Hill, etc., considered reasonably affordable options. Many of these do not come on the radar of most home buyers since they are located in remote areas. But they are slowly getting popular as remote working makes strides, allowing employees to choose a location to live and work from without considering its proximity to the workplace.

Mortgage Rates

As of 2017, the total amount of home loans in Australia was 21.4 billion AUD, and average interest rates fluctuated between 4.2% to 5.2%. Mortgages typically last between 25 to 30 years. Hence taking a mortgage is a decision you’d want to carefully consider. Additionally, the increase in property costs without an accompanying increase in income has led to banks issuing more loans, which experts warn could be dangerous for the country.

Given the high level of skepticism among financial authorities regarding mortgages and the country’s high debt-to-income ratio, taking a mortgage in the current times is something you want to think about. A wise financial decision would be to wait a short while to see if conditions improve.

Freedom to Succeed

With a large percentage of foreigners, Australia is an incredibly diverse country to live and work in. It also has relatively liberal laws. The minimum wage is $20.33 an hour — higher than the global average — for even those with little experience and skills.

English is also the native language, making it easier to get a job for a large majority. And the explosive industrial development taking place across the country presents numerous opportunities for high-paying jobs. These factors contribute to making Australia a place where every individual truly has the freedom to succeed.

Safety Down Under

Australia is safe, prosperous, and free, making it a great place to live in. The United Nations ranks it as the second-best country in the world to live due to its excellent quality of life index. Most Australians enjoy an incredible 82 years of life expectancy on average.

Since it is a nation of immigrants, it is also a tolerant and multicultural society with a complete rejection of racial discrimination. That’s not all; Australians are also said to enjoy a higher-than-average disposable income, and income to debt ratio.

But newcomers to the country might find its climate brutal. Not to mention the dangerous insects and animals. However, these risks are mitigated as you get more experienced with life in the land Down Under. Bush fires are also a cause for concern, with the 2019-2020 bushfire season considered the worst in recent history. While the cities are considered safe, those looking to buy property in remote or rural areas in the country should first research the historical fires in the area before making an investment decision. Taking a note from the country’s tourism slogan – there’s nothing like Australia!