Australian property real estate a boon for some

Property prices in Australia have skyrocketed in the past decade, only increasing speed in the last 5. This has been a boon for property investors but it has also been tough for others as they struggle to keep up with the rapidly rise in housing prices.

SussexStSydneyPropertyJust as an example, property prices in Sydney, Melbourne and Brisbane have risen 75, 45 and 30 per cent over the last 5 years. At the same time, low interest rates and growing foreign investment monies, particularly from China, have pushed an increasing volume of properties into the “unaffordable” bracket for many Australians. In situations not unlike Singapore, many millennials now wonder about their future in terms of home ownership. While some young adults who have gotten into the investment game earlier risked a great deal while working exceedingly hard for their down payments are now seeing dividends paying off, many others have to settle for shared housing to make ends meet.

Those who have invested early are able to finance subsequent property buys based on the soaring value of their property assets while lower-income Australians are finding it harder to afford even a deposit. Competing with property investors is simply impossible. Many have submitted to the possibility of renting for the rest of their lives.

MelbournePropertyProperty analysts are however increasingly aware of the danger of a property bubble especially as the lending from the country’s banks may have resulted in an unsustainable rate of growth. Some loans are 4 to 6 times the borrower’s annual incomes and there is a fear that there will be a collapse. The push for the Australian government to ensure homeownership is affordable for the majority may come sooner than later as disinclination grows.

Why property cooling measures are here to stay

ABSD, SSD, TDSR, QC – These abbreviations related to property cooling measures implemented over the course of 5 years have taken root in the local real estate and construction industry and despite a much quieter market, may not go away anytime soon. And with good reason.

Aeon MelbourneThe demand for properties in other major Asia-pacific countries and cities such as Hong Kong, China, Australia and Japan have not seem to wane, reflected by soaring home prices in Hong Kong, Sydney, Melbourne and various top-tier cities in China. And this is despite their governments placing more restrictive regulations in place in efforts to curb investment outflow and property speculation. But perhaps it could be the case of too-little-too-late. And it also goes to show that investors are still looking for markets to hedge their funds and the pool of willing China investors looking to take capital out of their country agains a depreciating yuan.

CasaAerataIn Singapore, despite a gradually decline in home prices, the market has remained resilient and a untimely lifting of property curbs may result in a quick and unrecoverable increase in property speculation. In fact, despite the series of property curbs instrumented since 2013, the property cycle seems to already be reaching the bottom, which could only mean a turnaround possibly within the year. Last year, resale volume rose 28 per cent and total sales increased by 16 per cent from 2015, indicative of a recovering, or at least stabilising, market.

Main factor for Australia’s property price-rise not foreign investment

The Canberra-based Australian Treasury has recently divulged the results of a study which showed that the main factor for rising property prices in Australia is not, contrary to popular belief, investment monies from foreign buyers but the strong foundation of household formation in the country.

sydneypropertyPerhaps it is a culture where citizens are keen to form new nuclear family units and to live in their own home which drives up demand for property, especially the main Aussie cities such as Sydney, Melbourne, Perth and Brisbane. The possible influx of foreign students in these cities could also mean locals are buying up properties to reap rental yields, thus pushing property prices upwards.

pacecollingwoodmelbourneSince 2008, property prices have risen more than 50 per cent, but only A$122 (S$129) of the A$12,800 increase in overall prices per quarter were attributed to foreign demand. That said, a total of A$24 billion in real estate investment monies from Chinese buyers have been approved in the year ending June 2015. This year, some states have begun to impose transaction taxes on foreign purchases of Australian properties and the study done by the treasury may have excluded properties purchased by locals for their overseas family members and relatives.

Will demand, local or foreign, wane and if so, how soon? Will prices slide gradually or continue to remain stagnant at its current levels?

 

Chinese buyers inject new money into Aussie property market

In Australia’s major cities, the Chinese have purchase properties quickly and surely over the years. Property prices in Sydney and Melbourne in particular have been on full steam for a good 5 years now, having risen 55 per cent since while mortgage rates have fallen. The buying continues despite a fall in the yuan following last year’s global financial market bedlam.

SydneyKentSt ApartmentPhoto: Apartment on Kent St., Sydney.

As property prices in top-tier Chinese cities such as Beijing and Shanghai continues to inch up, more Chinese nationals are bringing their monies out of the country and looking for investment opportunities elsewhere on the globe. A 2-room apartment in Beijing sold for S$1.7million could more than comfortably fund a S$962,660, 688 sq m house just outside of Melbourne’s central business district. Most of the purchases made by Chinese Australian permanent residents are funded by relatives in China.

The Australian government has since clamped down on foreign investment as locals fear being priced out of the market. But Australian property analysts say that publicity around the issue of foreign-buying have made it seem bigger than is actually is. In fact, all the activity in the property market have helped to keep the property and construction industries busy and booming.

 

Melbourne’s Twin Peaks

As if the property scene in one of the loveliest Asia-Pacfic cities could not get more exciting enough, add towering twin 80-storey residential blocks and with almost 2,000 retailers in arm’s reach and there is buzz upon buzz.

QueensPlaceMelbourne‘s central business district (CBD) will be welcoming at least 819 new private apartments in just one tower alone of the 2-towered Queens Place, a landmark residential project right in the city centre atop Flagstaff Hill, the city’s highest point. Talk about cream of the crop.

Interspersed between residential units within the 80 floors of block 1, which has been launched in Stage One of the project, are commercial and retail spaces. With prices starting from A$429,000, there are a variety of units available including one-, two- and three-bedders, penthouses and sub-penthouses. Demand from local buyers have been positive and the project certainly presents itself well to overseas investors.

Photo credit: South East Property

This sparkling new gem also boasts amenities such as private lobbies, pool, spa, sauna, wine cellar, library, private gardens, private bars and dining rooms, and even poker and mahjong rooms. It’s prime location puts it within 2-minutes walk away from major shopping malls including Emporium, Myer, David Jones and Melbourne Central, and also the numerous offices nearby. Without doubt it would command considerable resale and rental yields especially with a rising Australian property market.

The project is marketed exclusively by South East Property in Singapore and Malaysia, in collaboration with Colliers International.

Buying Melbourne

aurora5Australian properties have been rather widely publicised in Singapore, especially as Singaporeans look outwards for investment options. It is not uncommon for parents to purchase a property in the country in which their college-age children will be studying in, for their accommodation purpose during the period of their study in the country, and thereafter renting it out as a way to earn profits.

With that in mind, the considerations are often the rental value of the property, the ease of care of an overseas property and the potential for long-term appreciation of property value. One of the most recent launches in Melbourne, Australia, is the Aurora Melbourne Central integrated project in La Trobe Street. It is developed by Malaysian developer UEM Sunrise.

Since its preview on the 23rd of October, Singaporean buyers have snapped up 15 per cent of the 941 residential units. Aurora Melbourne is a 92-storey mixed-use development with retail space, office, serviced apartment and hotel components. The most popular units were the one-bedders, which start at 456 sq ft and range from A$410,000 to A$580,000. The property is situated in Melbourne’s popular and artistic Southbank.

Besides properties such as this situated in the city centre, there are a number of other properties in the suburbs and city fringes also being marketed. And usually those near universities are most popular with buyers from Singapore, Hong Kong, China and Malaysia.

Know your Asia-Pacific Real Estate property restrictions

As the property buying-selling scene bubbles possibly into a timely frenzy, governments across the Asia-pacific region are tightening the hold on local properties. Foreign buying of property might be becoming more difficult, especially if you are unfamiliar with the ins-and-outs of the industry.

res280Countries with the most amount of restrictions include China, India, Indonesia and Vietnam. Australia and Thailand are in the middle tier and Hong Kong and Malaysia have the least amount of restrictions. Singapore straddles the middle and last tier, with some restrictions applying while in Sentosa Cove, there is almost no restriction where non-PR foreigners can purchase landed homes. On the mainland, foreigners can buy private homes albeit with a 15 per cent additional buyer’s stamp duty.

Melbourne ApartmentIn countries where Singaporeans frequent when looking at investing in real estate include Thailand, Malaysia and Australia. A brief outline of regulations in these countries are:

  • Malaysia – In general no restrictions apply, but foreign buyers can only purchase properties above the threshold value of RM500,000 per unit.
  • Thailand – Foreigners can purchase land with a 30-year lease period, with the option of renewing for two following 30-year periods. But foreign real estate buyers can buy freehold properties for up to 49 per cent of a single development. If exceeded, the purchase can only be leasehold.
  • Australia – While foreigners cannot purchase resale homes, all uncompleted properties or land earmarked for development can be purchased.

What are the advantages and disadvantages of these property restrictions? In countries where land is scarce, governments’ protectionist schemes are deemed as necessary to keep prices in check. But in places such as Singapore and Hong Kong, these schemes do not yet seem to keep foreign buyers away. Is there a reason behind the moves or merely a calculated and well-timed measure to buoy coffers and boost growth?