Australia property outlook

The growth of residential property assets over the past five years in the major eastern cities of Australia has been strong and consistent. The projection for the next five years demonstrates substantial growth. Historical capital growth in the major Australian cities has averaged approximately 10% per annum each year, with rental income usually between 5-8% of the price. Rental occupancy rates are traditionally over 95%, and most properties are freehold.

Australia's desirable location, offering a better lifestyle has led investors to expect high investment returns and increase in property values. Capital growth exists due to a high demand for property. Government and private capital investment, job opportunities and infrastructure have led Australia to be a prime location in terms of property investment and future growth.

Based on historical trends in the property market and key economic indicators, the Australian property market is considered to be a sound investment opportunity. Australia's resilient economy has avoided the economic downturn experienced by many OECD countries during 2001 and 2002. It boasts consistently stable GDP growth, stable interest rates and rising exchange rates. Signs of the economy recovering from its slowest growth in a year have prompted some economists to forecast a positive rate increase by December.

Australian economic growth is poised to remain strong despite increasing inflationary pressures, according to the latest forecast from Access Economics. Australia is showing signs of the economy recovering from its slowest growth in the last couple of years. The housing market is at last slowing down, reducing the risk of higher home loan interest rates and raising hopes of a soft landing ahead. With the Australian dollar now at higher levels, both underlying and headline inflation seem set to climb through 2005. The future of Australian property investments seems to be promising where analysts are confident that the strong economy, the ageing of the baby-boomers and low interest rates will underpin healthy capital growth through 2006. Long term investment in the buy to let market seems very promising due to a high demand in tenant population.

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