In 2016, the property prices in Sydney grew 16 percent vs a year earlier. No typo, it’s in double digits. Nope, their household incomes did not rise by double digits. It rose only by single digit. During the same period, the property prices in Melbourne grew 11.8 percent. We can read two articles about it here: abc.net.au and here: afr.com. Another report showed Sydney’s property prices grew 15.5 percent and Melbourne’s by 13.7 percent. The article by smh.com.au is here. Australia is a favourite destination for foreigners looking for quality of life. An earlier report showed that nearly a third of all apartments being built were bought by foreigners. Yes, Chinese from China is the largest group. Read here: Crazily hot,28% of Melbourne apartments bought by foreigners
Based on the article by smh.com.au, in a survey conducted among 28 experts, only one is predicting a property bubble bursting. He is Economist Steve Keen, now based in Kingston University London. His reasons for saying so? He shared, “Mortgage debt in Australia has gone from 80 per cent of GDP at the time of the GFC to 95 per cent today – one of the 3 highest levels in the OECD.” Note though that he is alone. The other 27 said there is no possibility of a property bubble bursting. Some reasons stated as follows. RBC Capital Markets Su-Lin Ong says, “Population growth, particularly in Victoria, will continue to underpin the housing market.” HSBC’s Paul Bloxham says, “We expect Sydney and Melbourne housing prices to continue to rise in 2017, albeit at a slower rate than in 2016. We see single digit housing price growth in both markets.” Do read the rest in the article here.
For some of us who love Australia and is really seriously thinking of getting a property as a long term investment, Western Australia (Perth)’s property prices are actually dropping. Read here: news.com.au The major reason stated was due to the loss of jobs available, thus reducing the demand and suppressing the prices. It even said that should the Labour party (Australia) wins, then this job reduction will be reduced even more! Beyond just Perth, there are also other smaller cities which is showing a decline in prices. The only issue may be what if this is continuous even after we have bought one? This is the reason why property investments must also include some study about the state of the economy of the particular country. As long as we are confident of its long term GDP growth, then the property prices should rise, it’s just a matter of time. Happy reading and following.
written on 4 Feb 2017
Next suggested article: Median home prices – Australia cities (by Corelogic)