When the Banking sector and financial markets went into turmoil during the Global Financial Crisis, many people started to look to Australia, and in particular Australian property, as a safe a haven for investment.
After all, during the previous major World Stock market crash (in October 1987) when the Dow Jones fell some 23%, and the Australian all ordinaries fell some 42%, Sydney house prices then rose by 70% in the 3 years immediately following the stock crash, and Melbourne by over 50%.
But what is so special about the Australian housing market that seems to make it immune from the effects that plagued some other world real estate markets, including the UK and especially the USA, during the GFC?
Firstly, the Australian economy remains strong, and as is well known now, was very resilient during the GFC.
Second, there is a chronic shortage of construction and new houses being built around most of Australia. This is little understood by most people.
In the USA for example, there were reports that literally millions of homes were oversupplied and lying empty during the GFC.
Australia simply doesn’t have suburbs full of empty houses awaiting mortgagee sales. Instead Australia is not building enough houses for its increasing population and now occupancy rates for rental properties have climbed to record highs.
Third, there is huge and continuing migration to Australia. 131,000 people migrated to Australia in 2005-06. In calendar year 2007, over 410,000 people from overseas arrived in Australia, the highest ever seen since the Second World War.
By 2008 data from the Australian Bureau of Statistics shows an incredible 483,600 new overseas arrivals, and similar arrival figures have continued right through to 2004. While exact data is hard to source as there are so many categories of ‘‘migration” and often published figures are not accurate, what cannot be disputed is Australia’s rising population, and as economic conditions have improved, Australia is increasingly seen as a“safe haven” so it is a near certainty that high levels of migration shall continue well into the future.
In 2011 Australia’s population had increased to 22.7 million. By 8 April 2014 Australia’s population had hit 23.4 million.
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