Australian Property Is On Global Roaming

Australian Property Is On Global Roaming

.
It’s been quite fascinating to follow the Asian buying phenomenon of Australian real estate of late – more particularly how the buying demographics are changing. Most notable the smallest market demographic today in Australian real estate is brand new constructed properties which remain dominated by Asian investors. In recent times we have seen a shift with Asian investors moving into the traditional home market which previously was a no – go market. A reason why would be that this is Australia’s largest property market so it makes sense that now they want to participate in all the available markets.

On a global scale Australia has not really attracted the Ultra High Net Worth Individuals (UHNWI) although we are now witnessing this emerging market with the world’s wealthiest fast tracking real estate acquisitions in Australia. Knight Frank 2014 forecasts that 66 per cent of global growth in the numbers of UHNWI’s will be from Asia over the next ten years.

No doubt they would be closely observing that prices have been the strongest in Sydney (up 14% over the past year), Perth (9%), and Melbourne (8%) although it is yet to be ascertained what percentage of these new found gains can be attributed to foreign ownership. Knight Frank Australia’s research director Matt Whitby said there was growing demand from Asian buyers, particularly Chinese, for prestige residential properties in Sydney. “This is driving prices and it is expected Sydney’s prime market growth will continue into 2014, buoyed by low interest rates and steady foreign demand, especially from South – East Asia and China.”

In 2013, over 74 per cent of overseas investment into residential developments in Australia originated from Asia. If one looks at the Forbes Billionaires List there are 135 property tycoons in the list who have obviously benefited of late from surging property values around the globe. Even more interesting is that 14 out of the top 20 richest property billionaires hail from Asia. This is further reinforced by recent Foreign Investment Review Board data which shows that Chinese buyers poured $5.9 billion into Australian property last financial year.

MahonPool

SYDNEY AERIAL PHOTOGRAPHY 

 

Last week in Property Observer Jonathan Chancellor wrote an interesting piece The Ngs, Singapore’s richest family, spend $425 million on Sydney trophy property which again highlights how Sydney in particular is now top of the shopping list for wealthy Asian investors. The sad reality being that with all the buying loopholes currently available in Australia our government has absolutely no idea just how large this buying purge is – well not until 2016 when the next Census of Population and Housing is conducted in Australia.

13-03-2014 11-58-11 AM

13-03-2014 11-59-51 AM

Interesting that the research into these graphs by Digital Finance Analytics (DFA) found their surveys identified that after 12 months in Australia most are likely to buy in Sydney (47%) or Perth (35%). By extrapolating this data DFA estimates demand for property from migration over the next three years shows an extra 900,000 properties will be needed – of this about 5.6% is driven by net migration. On that basis given past and present construction data I would think we would be lucky to see 300,000 of the required 900,000 new homes built by 2016. On that very basis it would be reasonable to assume that prices more particularly in Sydney will continue to rise for quite some considerable time to come. At some stage down the track governments will be left with no alternative but to play catch – up where the fastest way to do that will be to build high – rise developments.

Unfortunately in Australia today aside from not having a Housing Minister there is also no strategic housing plans in place, so there is absolutely no possibility of these recommended key performance indicators being met. Why should overseas investors be allowed to qualify for first – home buyer grants? Then of course we come to negative gearing which is now completely out of control to the extent it has the government at a complete loss to understand what is the best way to bring this back under control.

MOSMAN – 2088

• Number of houses on the market this time 2013 – 108
• Number of houses on the market last week – 83
• Number of houses on the market this week – 93
• Number of apartments on the market this time 2013 – 78
• Number of apartments on the market last week – 67
• Number of apartments on the market this week – 63

CREMORNE – 2090

• Number of houses on the market this time 2013 – 15
• Number of houses on the market last week – 13
• Number of houses on the market this week – 13
• Number of apartments on the market this time 2013 – 12
• Number of apartments on the market last week – 12
• Number of apartments on the market this week – 12

NEUTRAL BAY – 2089

• Number of houses on the market this time 2013 – 12
• Number of houses on the market last week – 6
•Number of houses on the market this week – 11
• Number of apartments on the market this time 2013 – 41
• Number of apartments on the market last week – 32
• Number of apartments on the market this week – 39

Source: Australian Property Monitors

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate
*Click Here

For this week’s opens for inspection
*Click Here

I’m proud to say that last week’s blog did start many conversations – The Great Chinese Property Burn. Which is why I believe that Tony Abbott and Joe Hockey will tighten overseas buyers when the May Budget is handed down because nobody can really tell just how powerful this buying dynamic is – until many years later?

A Housing Minister and an Australian Strategic Housing Plan would be a wonderful start given at present we are catering for parties with absolutely no idea how many will turn – up. We all know what happens when that happens – don’t we.

Cheers ^__^

One Response to “Australian Property Is On Global Roaming”

  • Ann says:

    Hi Robert,

    Be interesting to see what the Budget does on this, if anything. In any case, stamp duty / land tax is probably the vehicle and those are State taxes.

Leave a Reply

Your email address will not be published. Required fields are marked *