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The Australian Property Market in Today's Economic Climate

Published by Robert Thomson | November 12th 2008 | Views:

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Everyone is talking doom and gloom and making it appear as though that is all we have to look forward to. What we really need to do, instead of listening only to what the media has to say, is look also at facts and figures. Investors need to understand the market they are investing in, which ever one that may be. There is so much information to be gathered from reliable informed sources. There is record population growth in Australia with continued housing shortages. Property is still a market worth investing in.

The property market just like any other market is subject to supply and demand. It is important to research the facts rather than to rely on speculation or observation. The demand for housing is determined mainly through demographic changes.

These changes include:- population growth (increased migration, higher birth than death rates), changes in household size (through divorce, children leaving home).

Also what must be considered is the rate of new dwellings being built, an analysis conducted by the Commonwealth Treasury estimated that the demand for housing will increase to 200,000 per annum by 2010 while new dwellings are expected to reach only 150,000 to 160,000. Add to that a shortage of available land and the result is an imbalance between supply and demand that can only result in Australian property values increasing.

The other factor to consider in these times as well as in any other is affordability.

When is the right time to enter the market?

The answer to that is always, 'Now is as good a time as any'. What you must do though is look at ways to organise your finances and understand what way is going to work best for you.

The Government is currently offering an increase in the first home owners grant to assist entry into the property market, or you may consider the buy and rent option. This strategy means you buy in an area you can afford with the intention to rent the property out, the property has the potential for capital gain over time and can often offer a high rental return. Meanwhile you rent in an area that suits you for location and work, with the freedom to relocate as desired. The idea is to get into the market now and stay there for the long term. If, as a buyer you can combine solid research with a medium to long term outlook you will find many opportunities offering good capital growth.
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