Australia Still The Lucky Country

There ….. I said it and I mean it!

For all the negative media surrounding the Australian property market at the moment, we are still one of the only countries to escape the global decline that is plaguing the rest of the world. Housing prices in both Europe and the USA have experienced a strong decline, however, in Australia our prices have actually increased and continue to do so.

There would be some in the industry who would get their bear on, saying that this is further proof of an inevitable crash of the property market, but this is not necessarily so …. And here are 7 solid reasons from Michael Matusik why.

1. Population growth – Australia maintains a strong population growth. The domestic population is aging, but the migrant intake is largely in the 20s to 30s cohort, which means increasing household formation and greater demand for dwellings.
2. Tight lending practices – Interest rates still have room to fall. Australia has full recourse loans, giving lenders the right to take assets off the borrowers if the repayment isn’t made.
3. High equity – Current loan-to-value rations are around 53 per cent, reflecting our current conservative position towards debt. Australia’s housing debt to housing assets is 29 per cent and our debt to overall assets is just 19 per cent. This means as a nation, we own around 70 per cent of our homes. Australians are also saving more, around 10 per cent of our incomes. The improved state of our personal finances further reduces the risk of house prices collapsing.
4. Undersupply – Not for every dwelling type, but the bottom third of the market. There is an undersupply of basic, affordable housing across our capital cities and in major regional centres too.
5. Economy growth – Nearly all of us can find work. Housing markets usually crash with large falls in employment.
6. Low unemployment – As long as our unemployment rate stays below eight per cent, wholesale falls are unlikely. It’s currently 5.1 per cent.
7. Few mortgage defaults – Just 1.37 per cent of home loans across Australia are 30 days in arrears, and just 0.54 per cent behind mortgage repayments.

Matusik says it pays to have a long-term view in property investing. ”There is little doubt that values are now falling,” he says. ”How far they will continue to fall is unknown, but I don’t think it will be anywhere near as far as most property bears believe.”

I would love to hear what you believe in the comments!

Article source: http://mypropertypulse.wordpress.com/2011/03/29/australia-still-the-lucky-country/