Australia property market

Australia's economy was one of the strongest in the weak global economy of 2001 and 2002. With average annual real GDP growth of 3.3% since 1990, Australia's strong economic growth rates are higher than most OECD countries including the US and UK. There is a low degree of risk in the Australian economy. Australia's resilient economy has avoided the economic downturn experienced by many OECD countries during 2001 and 2002. It boasts consistently strong GDP growth, stable interest rates, rising exchange rates, relatively high levels of employment and a low rate of inflation.

The rental market is still highly visible with 29% of dwellings being rented, which is related to the high levels of property investment in capital cities and regional centres. The contribution of the real estate sector to recent economic growth reflects the sustained rise in residential prices in most capital cities over the past five years. Sydney, Melbourne and Brisbane are the strongest performers.

Off plan properties in Australia have provided huge returns percentage wise. Historically, the best performing properties in terms of capital growth have always been within cities such as Melbourne and Sydney. Properties close to inner cities and beaches have historically performed well. The growth in apartment, units and townhouses can be demonstrated by suburbs such as Manly in Sydney and St Kilda in Melbourne. Australia's economic expansion slowed sharply in the first quarter as sluggish exports and a cooling housing market put a brake on the rampant growth seen in the latter half of 2003.

In Sydney and Melbourne in particular (less so in Brisbane) there is little room for further land development and, therefore, even if demand for property slows, the limited supply tends to power the house and land market. Apartment development does not have the same inherent supply limitations and can therefore be oversupplied, with a corresponding risk of diminishing unit values should demand slow down.

It is evident that the Australian property market is far from booming, however clearly indicates a long term potential in buy-to-let properties, which have surged in recent years. After home ownership the private rental market is the second largest source of housing in Australia according to Australian Bureau of Statistics figures. The private market provided housing for a wide variety of Australian households such as low income groups who are unable to purchase their own home, young people who have just moved out of home, or those who rent by choice. The private rental market provided housing for about 20 per cent of Australian households far outweighing the public sector which accommodated only 6% of Australian households.

Australia's and Britain's economies have much in common with each other, where unemployment is at multi-decade lows, economic growth is strong and both countries are well into a cycle of climbing rates. What Australia does not share is a lack of space in which to build new homes -- often cited as a fundamental factor that is propping up the property market in Britain, where the number of new homes being built is at the lowest since World War Two.

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