There have been many stories in the media that the Australian real estate boom is over, and that the market is headed for a slowdown. You are no doubt wondering if that’s true and whether you should sell your property in Australia fast.
Okay, there is no question that the property market in Sydney and Melbourne are overpriced right now. Indeed, most of the apartments that are available in the two cities are far beyond the buying capacity of most Australians. That could be one reason why the real estate market in these cities is dominated by wealthy Chinese investors – who can afford to buy the properties here.
The slowdown in China has meant that there has been a general cooling down of home prices in Sydney and Melbourne. That’s true, most of it. But does that mean that the Australian property market is set for a decline in the near future?
No, the reason for this is that in Australia, there has been a real estate boom for 30 years now. Housing prices across Australia have shot up by 7.25% on an average per year over the last three decades. The rise in prices has been in double digits since 2010, especially in Sydney and Melbourne and in some pockets of Brisbane.
Australia has been completely transformed by the real estate boom. Back in the past, cities such as Sydney and Melbourne used to have significant working class populations, in addition to the middle class and the upper class. So there were plumbers, electricians, and carpenters that occupied the same spaces as doctors, lawyers and business executives.
That has changed today. Now, because of the rise in real estate prices, the working class has been pushed out of cities such as Melbourne and Sydney. You would be hard pressed to find anyone who owns a home or an apartment in these cities is not a lawyer, doctor or investment banker, or belongs to the top 5% of the Australian society.
With many homes and apartments costing millions of dollars today, much of the population has been priced out of Australia’s biggest cities. This is not a good thing, as it has created a new class system in Australia, much like the one that exists in the UK.
Incomes have risen across the board in Australia over the last two decades. But while the income of the bottom 20 percent of the population has risen by only 44% from 1995 to 2012, that of the top 5 percent has risen by 78%. That is a big difference.
There are a number of property owners in Australia that are asset rich and cash poor – they own properties from several decades ago that are valued in millions right now. But the only way they could monetize their enormous home equity would be to sell up and downsize. Most people, especially those who are older are unwilling to do that as yet.
As a result, the demand for housing in Australia is much higher than the supply, and this means property prices here will stay high for the foreseeable future. You can certainly buy a home in Australia online at the right price, or sell one, for that matter, as long as you consult the right overseas property specialist.