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Real Estate Prices in Australia

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Real Estate Prices in Australia


Over the last past decades, Australian real estate prices have shown increases in their value. According to Stapledon (2010), the prices increased approximately 3 per cent per annum in real term since 1970s and 6 per cent per annum since 1990s, which have proven significant demand for real estates. The main price boom started after 2000. The Sydney market peaked in 2004 and overall in Australia was in the year 2008. This peak corresponded with the Global Financial Crisis. Consequently there was huge price fall in prices of real estates throughout United States and countries in Europe, but Australia stayed basically unaffected as there was only minimal falls in the prices in 2008. The situation in Australia recuperated rapidly and from the middle of 2009 till the middle of 2010 the Australian real estate market recorded a rise of 15 per cent. This research will discuss firstly the reason for real estate price fluctuations, secondly Australian government control over these prices, and finally the current situation and trend for the future in real estate prices.

The reason for real estate price rises

        The population in Australia increased rapidly in recent decades. According to (“Australian population growth is double the world average”, 2010), there was an increase of 451,900 people on 30th September 2009 for the period of the last year in Australia. This has been keeping the rate of growth about 2.1 per cent, which is a higher number than in the most other countries in the world. Even the number of growth is quite high for a developed country as Australia, it does not reflect reality. In fact, the main part of the growth number was caused by oversea migrants, which was around 66 per cent. The rest of the number of growth, around 34 per cent, is because of difference between births and deaths. Because of this increasing number of overseas migrants, especially international students who came to Australia, the prices of rent have risen rapidly in the last decades. In addition, Australian real estate market has been flooded by a large number of foreign investors. For instance, mostly Chinese people, who fly in with packed wallets for investing in Australia, highly affected prices in Australian market. This negatively affects the affordability of domestic population in buying real estate.

Australian government influence

Affordability of real estate prices are composed from two main factors: demand and supply. Many of the factors that drive demand and supply are outside the control of Australian government. Therefore, Australian government has made the policy responsibilities for influencing and balancing the real estate prices. Sorensen (2015) stated once that all foreign investments in the real estate sector of people who are foreign residents, temporary residents or short-term visa holders from any country must lodge the application to the Foreign Investment Review Board (FIRB), and obtain approval before purchasing residential real estate in Australia. The policies surround the purchase of Australian real estate prices for anyone other than Australian citizens and Permanent Residents, and the policies reinforce stated view that foreign investors cannot purchase Australian real estate without legal advice for ensuring that they remain compliant with regulatory requirements. Moreover, any breaches may lead to penalties and consequently to orders for the disposal of the property.



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