Australian Real Estate Inquire about Australian Real Estate

Country Data

Location: Oceania, it is a country and a continent between the Indian Ocean and the South Pacific Ocean
Size: Total area is 7,686,850 sq km (slightly smaller than the US contiguous 48 states)
Population



Population growth trends and forecast: Australia’s Annual population growth rate has consistently exceeded 1% over the past decade and this rate of growth is predicted for the next 15 years

Major Exports:, Iron Ore, Metals & Metal Scrap, Petroleum Products, Coal, Gold, Meat, Wool, Machinery, Transport Equipment
Economic
Overview

What is driving the market?

  • Commodities based economy, benefitting strongly from the long global commodities boom
  • Growing ties with China
  • Talented labour pool
  • High demand for export products
Solid government and business infrastructure, business reforms
GDP

Current: The recently introduced economic measures should give the economy strength to fight the recession and the downturn in Australia will be far shallower than western nations. The Economist Intelligence Unit predicts a small contraction of 1.6% for 2009

Recent trend: GDP had boomed from 2004-2008, averaging 3.1% annual growth per year

Future trend: Rising commodities prices will jumpstart the economy and the strong ties with China will provide strength for Australian exports provided that the Chinese economy continues to grow

Inflation

Current: Inflation has sharply dropped for 2009 and IMF is predicting an annual rate of 1.6%

Recent trend: Inflation had risen largely and was a concern, leading to tight monetary policy

Future trend: The Reserve Bank of Australia believes that inflation is well contained and will continue to be in the acceptable range for the next several years
Employment (Labor)



Current: 2008 unemployment 4.26%
Recent trend: Declining unemployment to extremely low levels, wage inflation had not picked up in line with general inflation
Future trend: Unemployment expected to rise while economy is undergoing a recession and recovery
Foreign Trade

Current: Imports = $187.2B and Exports = $178.9B
Recent trend: Main trading partners have been China, the US, Japan, Singapore, Germany, UK and Thailand. The Australia-US Free Trade Agreement (AUSFTA) took effect on Jan 1, 2005, the first FTA the US concluded with a developed economy sine the US-Canada FTA.

Future trend: Relations with China will be stronger, aided by the close links Kevin Rudd has with China
Currency

The Australian Dollar was introduced in 1966, replacing the Australian pound. As of May 8, 2009 the exchange rate with the USD is $1 USD = AUD $1.32. To view current exchange values visit www.xe.com
Interest Rates
  • The Policy Interest rate is a primary tool used by the Reserve Bank of Australia to combat rising inflation
  • The Policy Interest Rate has been steadily lowered since the financial crisis took hold
The current Policy Interest Rate is 3.00%
FDI

Current: Inward FDI has reached a 5 decade high level of almost 3.7% of GDP, or $34.8B, outward FDI has also grown strongly, reaching around $30B

Recent trend: Australia has been seen as a favourable location for FDI as there are clear rules and guidelines set fourth regarding foreign investment

Future trend: FDI may be affected by the current turmoil, however, investment flows are expected to be strong once economic growth resumes
Real Estate market

Basic overview:

  • Strong mortgage market, banks less affected by subprime crisis
  • Favourable migration trends, especially for major cities such as Melbourne, Sydney and Brisbane
  • 64% of Australians live in state capital cities
  • Strong tendency to own a home, 70% homeownership rate

Current value

  • Price/sqm : $6,764
  • Rent/month: $4,033
  • Rental Yield: 5.96%

Recent trends or stats

  • There is a shortage of supply in Melbourne, Sydney prime locations are still facing undersupply issues
  • First Home Owners Grant has boosted consumer confidence and home loan approvals had increased for 5 straight months up to April 2009

Future trends:

  • Construction likely to slow as developers are cautious due to global crisis
Commercial property in a far more dangerous position than residential property (foreign lenders have pulled out of commercial property lending)