By Sharon Koh, KEO
Date: 22 Sep 2020
Two weeks ago, we wrote about the perks of doing property investments and shared the fundamentals to you. Today, we will be honing in and focusing on the reasons you should look at investing in the Australian market today.
As we all know, we are living in challenging times. The impacts of the pandemic are vast and with a global recession in the midst, you may find yourself wondering about the feasibility of investing in Australia properties today. The truth is, there will always be risks. It is arguably right to say that investing today is tougher than ever. And this points to another truth, that is, data doesn’t lie.
At GREEX, we have scoured through published news, findings and data which all culminate with our personal experience in investing in Australia to reveal that investing in Melbourne & Brisbane today may reap better returns in the years to come.
Read on to find out some of the compelling reasons to why you should consider investing in one of the Commonwealth countries – Australia.
Reason One: Stable, Secure & Sustainable Returns
For those seeking a new residential home to stay, they are likely to look for places that are liveable and lovable, and filled with opportunities which run the gamut from education to career prospects. But for investors such as yourselves, besides the aforementioned, you’d want to look for a place that is able to tide through tough times and has a proven record of being economically strong as well as is pro-investments and pro-businesses too. Beyond having plenty of natural (and man-made) resources and increasing capita, you will find all the above in Australia.
In an interview with Domain, Angie Zigomanis from BIS Oxford Economics stated, “Australia has had a very good run, it’s avoided recession for more than 25 years and seen very strong price growth in most property classes. It’s not surprising that people are seeing better investment opportunities elsewhere.” He also added that the nation’s political and economic stability would continue to lure foreign investment.
Today, Australia is arguably one of the best countries to invest in for stable, secure and sustainable returns. According to the 2018 Global Wealth Report by Credit Suisse, Australia was the No. 1 Richest Country based on median wealth per adult at US$191,453. In the following year, the numbers increased to US$227,891 and Australia ranked No. 2 Richest Country on the 2019 Global Wealth Report.
Australia is also one of the wealthiest Asia-Pacific nations that has relished more than 20 years of economic expansion. The 2020 Index of Economic Freedom lists Australia’s economy at 4th place among the 42 countries in the Asia-Pacific region. The government is reportedly looking to promote and engage in investments in the fields of infrastructure and digital payments. Essentially, what all these translate to are that there are going to be even more opportunities to diversify your wealth in Australia.
Reason Two: Rising Demand & Supply Imbalance To Maximise Your ROI
There is a projection of rising demand for housing amid a low supply of houses within Australia. We can infer this from a finding by the Australian Bureau of Statistics (ABS) which states the population could hit 30 million by 2029 and 49 million by 2066. Furthermore, from the 2018 report by Homely, we are also seeing the Average Median House Prices in Australia’s Major Cities increase between 1970 and 2016.
This year, ABS reported that following two years of falling house prices between 2018 and 2019, Australia’s housing market is gaining momentum again. “House prices in the country’s eight major cities rose by 8.1% during the year to Q1 2020,” the report states.
All these are great indicators that Australian houses are likely to garner greater value in the future, and profits will increase.
Reason Three: Australia Keeps Interest Rates Low To Boost Housing Market
We believe, for the first time in history, that the Australian authority has deliberately reduced their currency power to attract foreign investors. We saw a 6% dip in AUD when compared to SGD (S$0.94 = A$1) back in May 2020. Earlier in March 2020, we have even seen a dip of 19% (SGD0.81 = AUD$1). If we happen to invest in a period when the Singapore dollar is of greater value than that of the Australian currency, we will profit.
Furthermore, in a press announcement in March 2020, the Reserve Bank of Australia (RBA) revealed that they would “cut interest rates to a record low of 0.25 per cent” to help prevent a pandemic-driven recession. This interest rate would likely remain at this level for an extended period, said the RBA Governor Philip Lowe. In other words, the state is making it easier to loan money and re-inject them back in the economy. In the property cycle theory, when the interest rate is low, the property is forced to go in an upswing.
We hope that this article helped you to form a better understanding and if you have any further questions, do feel free to join us in our upcoming webinar session Click here to sign up whereby we dive deeper into the science behind effective suburb analysis for properties within the suburbs of Melbourne, Queensland & Brisbane etc.