Historically, Australia real estate cycles last around seven years peak to peak. After a stalling of house prices in 2004, overall prices indices have risen until middle of 2008. Some commentators believe the market is a ‘bubble’ and that properties are overpriced, which might be the case compared to wage growth, but demand for Australia real estate still outstrips supply. The following will help you determine whether Australia real estate is the optimum strategy to fulfill your international investment objectives:

1.

Real estate is a popular investment for Australians. However, the global financial climate and economic downturn have had a dramatic effect on sentiment in the residential and commercial property markets in Australia. Constraints on finance, tightened lending criteria from banks for property finance and an increase in interest rates by the Reserve Bank of Australia in an effort to curb increased inflationary pressure all look set to impact Australia real estate markets in 2009.

2.

House price falls, tumbling international commodity prices, heightened turmoil in global financial markets and inflation (2.5% as of May 2009) act as a drag on the Australian economy.

3.

According to the Economist intelligence Unit (EIU) real GDP will contract by 1.6% in 2009, owing to the gloomy outlook for global growth and strains in the domestic economy. The Australian dollar will weaken in 2009-10, owing to lower commodity prices, falling domestic interest rates and high levels of risk aversion among global investors.

4.

According to the Australian Bureau of Statistics, the weighted average house price index of 8 capital cities fell 2.2% from December 2008 to March 2009. Furthermore, the index fell 6.7% from March 2008 to March 2009.

5.

A recent cut in interest rates in Australia is expected to further protect the Australian real estate market from the worst effects of an economic downturn. On April 8, 2009 the Reserve Bank of Australia slashed interest rates by 0.25 percentage points to 3%. Although the full 0.25% has not been passed on to home loan consumers, the interest rate cut is predicted to encourage buyers back into the Australia real estate market.

6.

Foreign ownership of Australian real estate is permitted and can be across different property sectors:

i) As residential real estate for entrepreneurs living in or relocating to Australia;

ii) As commercial real estate to support your business activities in Australia; and

iii) For property investment to enhance global assets.

7.

All foreign investment in Australian real estate must go through an approval process involving the Foreign Investment Review Board (FIRB). Guidelines apply to protect Australian citizens while at the same time allowing investment which benefits communities within Australia. For example, foreign investment is allowed in uncompleted new developments provided that the foreign owned component does not exceed half of any one development.

8.

Australia's quality of living is admired around the world and is a contributing factor to the appeal of Australia real estate and migration to Australia. Mercer Human Resource Consulting rated Sydney, Melbourne and Perth in the top 5 cities within the Asia Pacific for living standards in its 2009 Quality of Living Survey. Sydney was ranked 10th out of 215 cities globally, Melbourne and Perth ranked 18th and 21st respectively.

9.

The Australia real estate market is not following the declining trends seen in many markets around the world.  Prices have actually risen by 2.8 percent in the January-April 2009 period.  Perth was the only capital city not to experience average price increases.  Of these capital cities, Darwin had the highest increase at 5.3%, while Sydney and Melbourne showed gains of 3.9% and 4.5% respectively. The simple factor of higher demand then supply is contributing to price increases in the Australia real estate market.  However, this is not the sole explanation, it is more likely a combination of attractive first home buyer grants from the government, low interest rates, poorly performing share markets along with the tight rental markets seen in most of cities.

10.

According to the 2009-2012 Residential Property Prospects report by BIS Shrapnel, average residential house prices in the Australia real estate market are forecast to rise as much as 22%. Among the capital cities, Sydney, Melbourne and Adelaide are forecast to show the strongest price growth at 19% over the next three years.

11.

Taxes are payable when buying Australia property and selling Australia property. Rental income from owning Australia real estate is also taxable. Asia Property Consultants assists client with dedicated advice on accounting and tax matters related to Australian property.

12.

Because of the current economic environment obtaining finance to support Australia real estate investment is increasingly difficult. Asia Property Consultants assists clients obtain property finance specific to their needs. In sourcing finance Asia Property Consultants works with leading international banks including Commonwealth Bank, ANZ Bank, DBS Bank and OCBC Bank.

13.

Asia Property Consultants independently assists international property investors effectively and efficiently manage all aspects relating to the purchase and sale of Australia real estate. Our firm draws upon the latest residential and commercial real estate market information, enabling us to offer honest, reliable opinions on i) Australia real estate cycles ii) the current and future outlook for Australia real estate and iii) expected interest rate and currency movements and their impacts on Australia real estate. In addition to our own experiences, our sources include statistics and forecasts from reliable, reputable sources including the Housing Industry Association (HIA), Australian Bureau of Statistics (ABS), RP Data and more.

For more information on the Australia real estate, call us in Sydney at +61 280 147 568 or contact us at email@healyconsultants.com