Posts Tagged ‘Australian Property Market’

Investing in Real Estate Down Under

March 26th, 2010 23 Comments
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There is no question that Australia is a land of opportunity.  The huge continent is home to a small population that has yet to fully take advantage of the country’s real estate potential.  Recent news suggests that the housing market in the United States has hit an all time low, with housing prices and purchasing down and out. This makes Australia an ideal alternative to invest in. The diversity of the country and the constant rising prices of real estate, the rich natural resources, and the diverse and beautiful areas to choose from make Australia an ideal option for multiple investments in real estate.
The nice thing about this fact is that foreigners may freely invest in Australia, all they need is government approval and once this is granted then investing may be done. There are various options available to potential investors. The choices of investments can range from purchasing vacant land, multiple units on one title, off the plan units, student accommodations, dual occupancy units, hotel conversions, and all the way through to mining towns.
These numerous options are what make Australia a great place to invest in and the property value will vary greatly depending on what type you choose to invest in. This means that the price of the property can range from very cheap to extremely expensive.
For more information on possible real estate investments in Australia, it would be best to consult the experts on home loans.  They have the information on the best possible investments and with the most potential for real estate.  They can also custom fit certain loan products to your capacity to invest and the amount of risk that you are willing to take.

Real Estate Investment in Australia

March 24th, 2010 22 Comments
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A year after the subprime mortgage crisis struck the United States, the effects are still being felt around the globe.  There is an economic slowdown, and prices of real estate have not yet fully recovered.  Buyers and investors are also looking for alternative places to invest their money, and trying to find safe havens for sure and steady earnings.

Fortunately for some investors, they have found this safe haven in Australia.  Prices of real estate have been steadily on the rise, and there has not been much depreciation felt in majority of the country.  Of course those looking for good deals and real estate bargains can simply do a little more research, and find that investment opportunity abound.

Investors whether foreigners or citizens can choose from a variety of investments.  They can try purchasing off the plan units, or buy multiple apartments on one title.  Student accommodation purchases are also common and purchasing properties in mining towns can also be an option.  Vacant land can likewise be purchased and later developed, and high end properties worth millions can also be purchased by prospective investors.

With the wide variety of choices of real estate properties to invest in, it would be nearly impossible not to find an interesting property for possible investment.  Considering that the land area in Australia is huge, the potential for expansion of real estate is endless, and the possibilities are limitless.  With a stream of constant investment opportunities, and unlimited choices, an investor could not ask for more.

In order to make sure that you are able to make the most of your time and money it would be best to consult the experts on home loans,  They can provide you with the necessary information, and provide you with the details of investment opportunities in Australia. They can also ensure that you are able to provide the proper documents when you engage in investing and real estate related purchases in Australia.

Australian Property Market on a Knife-Edge

June 22nd, 2009 32 Comments
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Predicting the future of the property market is always fraught with risk, but the current global financial crisis is making the task virtually impossible.

The Australian media are full of conflicting opinions from property experts on where the market is headed, making it even harder for the average home owner or investor to plan for the future. Real estate markets in most parts of the USA have taken a hammering over the last two years, and the big question in Australia is: Will the same thing happen here?

On the positive side, there are several crucial differences between the US and Australian property markets:

Housing Supply

Many areas of the US housing market such as Phoenix Arizona are significantly over-supplied with homes. In other words, many more homes were built than each area’s regular demand. The overhang of unsold new properties has been added to by the significant number of foreclosure properties on the market, leading to sometimes dramatic price reductions.

By contrast Australia has, according to property experts, been building fewer homes than the normal demand would dictate. This has primarily been a result of planning restrictions, escalating building costs, and the growing tendency of local government to meet budgetary demands through huge levies on developers rather than increased local taxes/rates for existing homeowners (read: voters).

The resulting shortage of homes is evidenced by the very low vacancy levels in the rental markets in all major cities, accompanied by rising rents. Together with the cost of new homes being significantly higher than the existing housing stock, these factors have underpinned the Australian property market.

Lending Rules

Jingle mail – where homeowners can no longer afford the repayments on their house and mail the keys back to the lender – has become common in the US in recent times. Most (but not all) US mortgages are non-recourse, in that the loan is secured solely against the property and there is no opportunity for the lender to get their hands on the borrower’s income or assets. Once the keys are handed back, the liability of the borrower is essentially over.

This mortgage structure has been at the heart of the sub-prime mortgage crisis – there has been no pressure on the lenders to verify the borrower’s ability to repay the mortgage, and no liability on the part of the borrower to continue repayments if the going gets tough, or a property market correction leads to the home being worth less than the mortgage.

In Australia, the loan liability rests with the borrower, and the lender can pursue the borrower’s income and assets should repayments not be kept up to date. This places much more responsibility on the borrower to organise their affairs to ensure that they can meet their repayments.

Additionally, Australian consumer legislation puts considerable onus on the lender to assess the borrower’s ability to meet their loan obligations prior to approving a mortgage. Over the last 5 or 6 years, low-documentation loans (where the level of loan servicing proof has been lower than for standard mortgages) have grown in popularity, but these are still significantly more secure than the sub-prime loans on the US.

As a result, the mortgage default rate in Australia is only around the 1% mark in 2008, which is about average for the last decade or so.

Other Factors

Other positives for the property market include strong immigration inflows, an economy growing at a significant (albeit slowing) pace, historically low unemployment, and a growing trade surplus.

The Downside

Despite the above positive factors, the outlook for real estate is far from rosy.

The elephant in the room of course is the current global financial crisis. Frozen credit markets and downward-spiralling stock markets do not bode well for any asset class in the near future. Property however, is particularly vulnerable in Australia, with massive mortgage debt a millstone around consumers’ necks. Home affordability is at a record low, as prices over recent years have been ratcheted up by a public which thought price appreciation would go on forever.

And if efforts to loosen up credit both here and overseas do not work – and work soon – it is difficult to see any other outcome than falling house prices. No matter what the demand side of the equation looks like, if you can’t borrow money then you can’t buy a house.

Anecdotal evidence from real estate agents suggests that prices have already started softening in many areas. Whether this softness gains momentum will depend on how the various factors above play out in the coming months.