What Are The Advantages To Investing In The Australian Property Market?

Despite the recent downturn in many cities, there are numerous advantages to investing in the Australian property market.

Cost of Living

The Economist Intelligence Unit’s (EIU) Worldwide Cost of Living 2019 survey has seen Sydney, Brisbane, Adelaide and Perth drop through the rankings.

This shows that Australia is becoming more affordable, which may make it a more attractive place to invest in.

Stabilising Prices

According to Angela Carrick, owner of Air Design Australia “The Australian housing market remains in a geographically broadly-based down-turn which makes the Australian Property Market attractive over other property markets.

Monthly price declines are now moderating, and with recent Auction results we are already seeing prices begin to stabilise especially heading into late 2019.”

A High Level of Immigration

Australia is not only an enviable holiday destination but a place that so many people decide to immigrate to and call home.

With good job opportunities, as well as the great weather, beautiful beaches and unique travel destinations it keeps attracting people to come and live here.

With one of the highest rates of immigration in the world, there is a steady demand for housing which continues to drive long term growth in the Australian property market.

Angela goes on to say “There is still good housing demand with a continuing high level of migration to Australia. Australia sees good employment growth, and major infrastructure projects to cope with population growth.

In my property market where investors are purchasing to attract the tourist dollar, The World Tourism Organisation reports Australia is ranked 7th in the top ten tourism earners for the year 2017 and continues to be a safe and friendly country for international tourists.”

Property Is Important to Australians

We know that property is important to Australians and they see it as an integral part of financial growth.

Mark Kentwell, Director at PRDnationwide Newcastle & Lake Macquarie, states “Approximately 60% of Australian have a property as their main asset class and source of wealth.”

Australians want to invest in their future and property has and continues to be a strong investment.

Low Vacancy Rates and Strong Rental Yield

Investment properties are appealing for several reasons, one of which is that we have low vacancy rates.

A report published by PRDnationwide, titled: PRD Australian Economic and Property Report 2019, states:

“The national vacancy rate (as of March 2019) was 2.6%, indicating a healthy rental market overall when compared with the Real Estate Institute of Australia’s benchmark of 3.0%.”

As you can see from the June Quarterly data below, most cities had a low vacancy rate below 3.0%.

Vacancy Rates June 2019 Quarterly Data

Median rent prices across capital cities have increased over the past year and despite some declining rates, rental yields are still good.

These two factors combined make it attractive to own an investment property in Australia.

Growth Outside Major Cities

“It’s not only the major cities that Australians invest in”, Mark says. “With the growth of satellite cities, there is more and more growth in metropolitan and regional areas. Melbourne has Geelong, Sydney has Newcastle and Wollongong and now Parramatta and Brisbane has the Gold Coast.”

“Many of these areas have seen growth from their primary industry and then other industries have grown as a result,” Mark explains. “For example, Newcastle’s primary industry is exporting coal. However, its tertiary sector is growing with the University of Newcastle’s Faculty of Business and Law opening a 100 million dollar campus and a new Japanese private University opening soon. As a result, the tourism industry is also doing well.”

With plenty of jobs, access to a skilled workforce and tourism dollars coming in, these areas have attracted house buyers, despite the downturn.

Foreign Investor Taxes

For overseas investors, Australia may still be seen more favourably than many other places around the world. Australia’s foreign investor surcharge (8%), which is in addition to transfer duty (stamp duty), is still less than other countries including:

• Canada (15%+) NRST or Non-Resident Speculation Tax in Ontario (15%) Foreign Buyers Tax (20%) in British Columbia
• Hong Kong (15%) BSD or Buyers Stamp Duty
• Singapore (20%) ABSD or Additional Buyer’s Stamp Duty
  This is just 5% more than Singapore residents pay who are buying a second or subsequent property
• UK (18-28%) CGT or Capital Gains Tax

What about their vacancy rates? Although places like Vancouver and Ontario have low vacancy rates, London had a vacancy rate of 5.1% (Nov 17- Oct 18) Hong Kong had a vacancy rate of 4.3% last year and Singapore 6.4%. These rates are significantly higher than most Australian major cities.

Government Policy and Economic Stability

The Australian Government has developed strategies aiming to keep the property market stable whilst bringing opportunities for new home buyers. This is helping to make property more affordable and attractive to local buyers.

Our strong economy, as well as our robust legal system and our government’s economic policies, make the Australian Property Market a solid market to invest in.

These factors have all helped keep the market relatively stable over a long period of time.

Those who have invested in property for the long-term have seen profitable returns and it continues to look this way.