For example, money coming in from property investors from other Australian states and territories – as well as the fluctuating economies of those cities, states, and territories – are also impacting housing costs. Locals with equity in their current homes, who may be looking at buying a second, third, or fourth property, also play a role in driving up costs.
Recently, it’s primarily Sydney and Melbourne that have seen the biggest bump in property prices which the media often suggest it is due to international investment. In fact, these cities are now two of the most expensive metropolitan areas in the world to buy a home in when you look at house prices in relation to income. But it’s too easy to place all the blame on foreign investors. Experts say overseas investment is actually a relatively small percentage of the Aussie housing market.
What’s more, it’s only certain portions of the market – such as brand-new homes and units close to Australia’s CBDs – that are seeing the effects of foreign investment. These are the areas in which first-home buyers – who’d like to be near the cities, for work or convenience’s sake – are seeing the most competition from overseas investors. As a result, many are either having to shift their property search further outside the cities or looking at properties which require a renovation.
The fact that there is competition also points to a lack of housing supply in the Australian property market, which also drives up prices. In this regard, according to some reports, overseas buyers can actually help with housing affordability, because their investments stimulate the economy, which in turn provides employment and promotes the building of more homes to meet the demand.
Doing their research
The internet is likely another reason we’re seeing increased interest in buying Australian property, not only internationally but also interstate (and inter-territory). These days, it’s so easy to go online for property information. You can find basically everything you need:
• Glossy photos
• Virtual property tours
• Information on specific areas and communities
• Real-estate agents
• Mortgage applications
• Conveyancers and solicitors
• And more!
It allows investors from basically anywhere in the world (with a good internet connection) to find a home for their money at a higher return than they might otherwise get in their local market.
Not always about return on investment.
Sure, when most people buy a property, they’re looking for capital growth – and again, that’s when they look to urban centres, such as Sydney, Melbourne and Brisbane. But in today’s world, there are other drivers, too.
For instance, there are a lot of people – with a lot of money – in countries with unstable political environments, and they’re looking to put that money somewhere. They may want to purchase a property to provide a safe and secure home for their families, for example. Or they may wish to send a child to Australia for a better education and better opportunities (and they need to house them). Finally, the Australian real estate market has a track record as a relatively safe investment, unlike, say, the volatile US share market.
Allied Investment Group advisers specialise in assisting clients take control of their finances so they can have more choices and security now and in retirement. Armed with this advice, you’ll be on your way to finding financial freedom and building wealth for the future. It’s never too late to start. Call 1300 886 149 to put your plan in place.