Australia Investments
With unique wildlife, remote, serene, white beaches and rugged landscapes and mountains, Australia is a vast country of incomparable natural beauty, with quality of life at the forefront of its USP.
From the cattle stations in the Northern Territory, learning to surf on Philip Island in Victoria and the crystal-clear waters of Byron Bay to the outback and rich Indigenous culture of the centre, the tropical waters of the Great Barrier Reef, life in Australia is truly unique, and so is investing there…
Australia’s housing market
Investor demand for residential property in Australia’s housing market is strong.
In 2016 residential property values rose for the fifth consecutive year, with Sydney and Melbourne seeing the highest growth with 15% and 13% respectively.
Capital growth of more than 10% was seen across the five biggest capital cities combined.
Top performing cities (by residential property value):
Sydney = 15.5%
Melbourne = 13.7%
Hobart = 11.2%
Canberra = 9.3%
Adelaide = 4.2%
Brisbane = 3.6%
Perth = -4.3%
Regional Australia saw a small 2.8% gain but in much of Western Australia, and particularly the old mining towns, property values sank.
Interestingly, value gains in apartments were far weaker than in houses.
The current housing cycle being experienced in Australia is longer and stronger than economists had expected.
Factoring in gross rental yields and capital gains, calculations show housing as an asset class earned a total annual return of 14.7 per cent (based on the combined capital cities index results). This is significantly higher for Sydney (19.2%) and Melbourne (17.1%).
Putting this into perspective the average superannuation (pension) fund earned around 7.2 per cent over the same period.
Banks predict growth price might ease in 2017 due to some fresh supply in the market but should still provide strong and stable returns for investors.
Why invest in property in Australia?
Lifestyles may vary from territory to territory and state to state but what the whole country has in common is a strong economy and political stability lead by a democratic government.
Currency: Australian Dollar (AUD): 1 GBP = 1.63 AUD
Population: 24.3m
Gross Domestic Product (GDP) of AUD: £1.3 trillion as of 2015
GDP rank: 12th (nominally) / 21st (PPP)
GDP per capita: £40754.36 (2015, nominal), £37557.94 (2015, PPP)
GDP growth rate: 1.8% annual change (2016)
GDP by sector: Services: 68%, Retail Trade: 5%, Mining: 7%, Construction: 9%, Manufacturing: 7% (2016)
Inflation/Consumer Price Index (CPI): 1.0% (September 2016)
Public debt: 23.3% of GDP (2013-14 outcome)
Budget deficit: £35.2 billion (2013-14 outcome)
Revenues: £301 billion (2013-14 outcome)
Expenses: £333 billion (2013-14 outcome)
The service sector dominates the Australian economy, making up 68% of GDP. The mining sector represents 7% of GDP. Economic growth has been largely dependent on the mining sector and agricultural sector (12% of GDP) with the products exported mainly to East Asia. Despite the recent decline of the mining industry in Australia, the economy has remained robust and stable.
Australia ranks 14th in the world in terms of market capitalisation and is home to some of the largest companies in the world including Wesfarmers (Coles Group), Woolworths, ANZ and Telstra & Caltex.
Unemployment rate: 5.7% (Jan 2017)
Labour force: 12m (2016)
Labour force by occupation: agriculture: 3.6%, industry: 21.1%, services: 75% (2009 est.)
Main industries: mining, industrial and transportation equipment, food processing, chemicals, steel
Exports: £148.4bn (2015 est.)
Export goods: iron ore, gold, coal, meat, wool, alumina, wheat, machinery, and transport equipment
Main export partners (2015): China 32.2%, Japan 15.9%, South Korea 7.1%, United States 5.4%, India 4.2%
Imports: £167.7bn (2015 est.)
Import goods: machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products
Main import partners (2015): China 23%, United States 11.2%, Japan 7.4%, South Korea 5.95%, Thailand 5.1%, Germany 4.6% (2015)
Opportunity
Since the global financial crisis, residential property in Sydney has risen almost 98% and nearly 84% in Melbourne. The positive effects of this can be seen in the construction sector which has picked up some of the slack caused by the end of the mining boom and contributed to the wealth effect of property owners.
Negative effects include locking many would-be buyers out of the market as affordability levels are high.
Australia remains a solid investment market and the housing, and in particular, residential property market, offers attractive yields to overseas investors.
If you’re interested in learning more about property investment in Australia, please speak to one of our expert international property advisers. Call 0800 500 3015 or complete the form below and we’ll be in touch with you as soon as possible.
