Below Market Value

Australian Property best in the world!

Australia is on top of the international property market. Brushing aside other hypes thrown at it, Australia currently holds the rank as the no. 1 country where to invest. Recently, the International Monetary Fund (IMF) expressed being upbeat about the country's growth; its economy is expected to grow by 3 per cent in 2012, and 3.5 per cent next year.

Australia's property market is entrenched in pleasant economic and political environments in spite of the current global financial uncertainty. This month the reserve bank slashed the cash interest rate to 3.75 basis points that would help liberalise the interest rates imposed by local banks and non-bank lenders in their homes or business loans.

Across the country, the number of Queensland property investors, are growing since 2012, according to the Australian Bureau of Statistics. This is despite the Queensland market being hit hard by floods, council rate increases, water/electricity inclines and SME'S and employment being smashed.

The Real Estate Institute of Western Australia (REIWA) also confirmed on the influx of investors ready with a renewed activity from the start of 2012. This warrants the picture that investors are on their feet and ready for further investment in property.

Housing prices in the country saw steady increases with the passing of years. From about 3 per cent annually in the 70s, the market prices rose to around 6 per cent every year in the 90s. In the late 2000s, housing prices in Australia (relative to average incomes) were among the highest in the world, sending the thought that the country was having a real estate bubble, like many countries.

The country, nevertheless, do not have the factors that could cause property to crash in other countries, like in the case of the US.

Many factors led to the continuous price increases in the country’s property market. These include its investment potentials which gave rise to the speculative demand for a real estate in Australia as a “sure bet.” The RBA itself noted that the taxation treatment in Australia is favorable to investors compared in other countries. A stable government, standard of living, and a well-meaning tourism drives have opened Australia in the eyes of the world.

Proof of my claim is the one-storey house on 30 Alexander St Manly NSW where I grew up. It is a single residential dwelling on around 557m2 land with 3 bedrooms + 2 bathrooms + 2 car spaces. This can be verified through the use of RP Data if you would like to see for yourself we can arrange this virtually or in person.

The property, which was originally sold at only $430,000 in 1990, was assessed with a fair market value of $2.25 million in 2007. Which means, over 17 year period the property increased from its initial purchase price more than five times! That means it doubled its initial purchase value every 3.25 years!

Now if you invested just 5% deposit into that property, $26,000 AUD in 1990 the profit would have been, $1,844,000 that is almost a 7100% return on your initial investment over 17 year! That equals a 417% return on initial deposit year after year for 17 years!! (Please note: this is minus interest holding and maintenance costs of course which are offset against rent and tax write offs, mainly negative gearing).

I challenge you to find out about the property you lived in as I am sure it has had significant growth in that time and will continue to have for many years to come. With the current pace of time, and other factors that favorably contribute in the state of property market in Australia, there could be no doubt why it stays as the No. 1 place in the world where to invest in property.