Australia could be the one bright spark in the 2009 property sector
With more and more Brits inquiring about emigrating to Australia the latest moves in the real estate sector come as good news at a time when property prices are plunging in the UK.Some of the most popular parts of Australia for British expats have not seen dramatic falls in property prices and in Queensland experts are actually predicting price increases of around 3% for 2009.Not least recent interest rate cuts in Australia are making it easier than ever for UK residents to buy their dream home
The latest rate cut helps maintain this and also makes mortgages easier to obtain. Also a spectacular crash in property prices is unlikely as analysts predict an increase in prices later in the year.
BIS Shrapnel senior economist Jason Anderson said the spectacular credit crunch price crashes witnessed in the United States would not happen here because Australia had a housing shortage and a large group of tenants hoping to escape the rent trap.
The research company predicts that median house price will rebound during towards the end of 2009. A home-loan resurgence in expected in most states as interest rate cuts and more generous first-home buyer grants enticed borrowers
However, property prices in Australia are falling and a survey just out shows that people certainly believe that the value of their homes will fall in the next three months. The survey by the Mortgage and Finance Association of Australia and BankWest found that 60% expect prices to fall.
This response can be looked at in two ways. It might be bad for those seeking to sell, but it is encouraging for those entering the property market.
It is certainly the most pessimistic response we have had in relation to property price expectations since we began the Home Finance Index in June 2006,' said the MFAA chief executive Phil Naylor.
But it was not a surprise given the general economic gloom that is pervading every corner of the globe at present. 'It is a double edged sword. Low price expectation is bad for those who already own property but good news for first time buyers,' he said.
And for those considering emigrating to Australia it is worth looking at which parts of the country are more optimistic. Western Australia was the most pessimistic, with almost 53.5% believing their property had lost value in the last six months followed by 63% in Victoria, 58.9% in New South Wales and 54% in Queensland.
But South Australians were the most optimistic with just 7% thinking that their home had lost value in the past six months.
Bank West's head of mortgages and savings, Paul Vivian, said the perceived drop in house prices would lead to a revival in first-time buyers entering the market. 'First-time buyers are more convinced than other groups that there will continue to be a drop in property prices, with 27.8% saying that the lower prices make now a good time to buy,' he said.
And it is easier to get a mortgage in Australia at present than in countries like the UK where finance has all but dried up unless you have a substantial deposit. Mr Naylor said its members including the Australian Finance Group and Mortgage Choice had seen a sharp rise in the volume of inquiries from first-time buyers.
Australian Finance Group last month said it arranged $474 million in home loans for first-time buyers, compared to $215 million in the previous three months.
Developers in Australia believe this is a good sign. The Lewis Land Group is about to start on a billion-dollar development, Sovereign Hills, near Port Macquarie on the mid-north coast of NSW. It will see 3,000 properties, mostly houses, built in the next 10 years.
Robert Yandell, director of the Lewis Land Group, said the economic climate did not concern him. 'We are producing affordable housing in an area where there is still relatively strong employment growth,' he explained.
An examination of real estate sales figures is essential for anyone moving to Australia as there are winners and losers. For example figures from the Real Estate Institute of Victoria show that expensive suburbs such as Albert Park and Armadale have suffered price drops of at least 30%. But other suburbs, including Fitzroy and Beaconsfield, jumped 20%.
There are, of course, other reasons for considering moving to Australia, not least the weather. And for those interested in buy-to-let property investment there is a strong tourism industry. Indeed Tasmania's Bay of Fires has been named the hottest travel destination for 2009 by the well-known international guide book publisher Lonely Planet.
According to Lonely Planet, the Bay has 'white beaches of hourglass-fine sand, Bombay Sapphire sea, an azure sky and nobody. This is the secret edge of Tasmania, laid out like a pirate's treasure map of perfect beach after sheltered cove, all fringed with forest.'
But it warns; 'It's not long since the Bay of Fires came to international attention and the crowds are bound to flock. Now is the time to visit.'
Also the rental market remains strong in Australia.
Signs of a mortgage squeeze in Australia are emerging but the rental market remains strong with supply far less than needed by renters. 'Investors need to buy property at a price that can be supported by rental income and not negative gearing tax laws,' said James Taylor, a finance analyst in Melbourne.
It could be that foreign investors are likely to become increasingly interested, especially if rents remain solid. According to the Real Estate Institute of Australia, Britons are the third-largest group of foreign property buyers in the country.
One area that is 'screaming out' for rental properties is Townsville, Queensland, where there is huge demand from miners who use the city as a base to fly to and from work and an influx of army officers as three regiments have recently moved from Sydney.
House prices in four suburbs of the north Queensland city have jumped more than 27% in the past year, according to the latest figures from property analysts RP Data and Jensen, a semi-rural suburb on Townsville's outskirts, recorded the highest growth of all with a 29.9% cent jump in house prices.
'Townsville is one of Queensland's most affordable major cities. It is screaming out for more rental properties. We have people coming in distraught about not being able to find rental accommodation because there is just so much demand,' said Sharon Leonardi, a local real estate agent.
Another agent, Jason Smith, said property with land is being snapped up as soon as it hits the market. He said the high demand also contributed to rising house prices and he expects growth to remain steady in the coming year. An off plan waterfront, inner-city residential complex recently sold out in just four days.
Other areas experiencing price growth include Norman Park, the Brisbane suburb where Prime Minister Kevin Rudd has a property. Estate agents are describing it as the 'prime minister's precinct'.
Queensland is experiencing fluctuating property growth rates, according to John Lindeman, a senior analyst for property researchers Residex, but population growth, much of it fuelled by emigration, will mean property is likely to hold its value more than other parts of the country. He is predicting a growth of 3% in 2009.
'Queensland's strong population growth, which is being increasingly driven by overseas migration, will see property values, overall, continue to go up. One of the key differences between Brisbane and big cities like Sydney, Melbourne and Perth, which are already seeing a downturn in property values, is that house prices are still cheaper than they are in these other capital cities,' he explained.
All the indications are that more British people will be looking to buy property in Australia in 2009. Lifestyle is also important to Brits moving abroad. A recent study from Alliance and Leicester put Australia as the second best place in the world after New Zealand for expat living. And a third of Brits are considering moving abroad according to a survey by Life Insurance company Scottish Widows.
'We are definitely seeing an increase in the number of applications from the UK,' said Emily Wheedon of Australian recruitment company Beaumont Consulting. 'They are fleeing the volatile job market and perhaps also the cold weather,' she added.