Property Investment
Why should you Invest in Australia?
There are several reasons why Australia is hot Property Investment area these days. Here are some main reasons for Australia growing to be a very strong Property Investmentmarket today:
Economic reasons:
• Fantastic climate: It has an average of 3,500 sunshine hours every year, which translates as high standard of health for its people, giving them a good lifestyle in the outdoors.
• It is rich in natural resources: Australia has large reserves of black and brown coal, silver, nickel, lead, uranium, iron ore, copper, gold, bauxite, lithium, diamonds and manganese ore.
• Property prices profitable investments: Considering property prices have been rising each year at 8% for the past century, Property Investment in Australia is a good deal.
• Capital returns: It gives 30% capital returns in important parts of the country, such as the Western Coast.
• Strong economic growth: Australia’s GDP is on a par with most of Europe and higher than many of the OECD countries, including the UK and US.
• Good operating systems: Its legal and property purchasing systems are akin to the UK’s.
• High property demand: This is due to high property prices.
• Mortgage tenures reasonable: Australia offers mortgages for five or 10-year periods, making property purchase viable for buyers, making property investment easy on purchasers.
• Transparent investment markets: The investment markets here are regulated, low risk and transparent.
• More value for your money: It has a strong currency (1 GBP = 1.8 AU$) which allows people to get more value for their investments here.
• No property taxes to be paid: Australian law does not state that buyers pay property tax as in other countries.
Lifestyle reasons:
• Australia has clean and inviting beaches, deserts, rugged mountains and tropical rainforests that attract people from all over the world to it, making it a great country to make a good Property Investment.
• It affords a lot of indoor and outdoor activities like swimming, jogging, bushwalking and fishing, among others.
• It is politically and economically stable with an open and safe lifestyle culture.
• It national language is English and it conducts its business and legal processes based on the UK pattern.
• Due to rising incomes and population increases, the demand for housing exceeds supply, thereby leading to price rises.
If you too want to make a Property Investment in Australia, be very careful or you might just end up making some hugely expensive mistakes, all because you didn’t research well enough.
RBA rate cuts slowly stimulating housing recovery
According to Bank of America Merrill Lynch Australia economists Saul Eslake and Alex Joiner, the RBA rate cuts over the last have produced a “relatively moderate” recovery. This moderate recovery looks even more moderate when compared to what has happened in previous cycles. Given the level of rate cuts, property prices should have increased a lot more.
When comparing what has happened in this cycle to previous cycles such as January to December 2001 when house prices increased by nearly 37% after the Reserve Bank cut interest rates by 200 basis points (from a cash rate of 6.25% to 4.25%) . Also, when the RBA cut the cash rate by 425 basis points from September 2008 to April 2009 after the GFC (7.25% to 3%) property prices rose 16%. This cycle seems a little lack lustre. While interest rates have dropped by 150 basis points yet property prices are more or less equal to what they were a year ago.
The great news for those looking for Australian property investment advice is that cycles do tend to follow one another. What these means for us is that while property may stagnate and interest rates could come down further, the eventual property boom further down the track could be even greater. It is just a question of how far away that may be. Most property investment advisors will be in agreement that the market has bottomed out and is finally marking turn.