Forget the Crash - Learn from Australia’s Property Market

We can all learn about property market movements from the ebb and flow of the real estate market in Australia

Will there or won’t there be a global property market crash?  If you live in the United State you’ll probably say it’s happening already, if you’re banking on property in Spain you’ll be praying it’s not impending and if you’re resident in the UK you’ll be counting down the days until it hits…but actually, forget the crash – learn from Australia’s property market.

Property prices in Australia were at an attractively affordable level back in 1995, the cost of living was also very low and the nation was gaining ground in terms of renewed appeal from British, European and North American would-be migrants who had been discouraged before when Australia seemed to want more Asian migrants.  In came demand for property, up went prices and bang should have gone the property market…but it didn’t.

Between 1996 and 2003 the price of a piece of real estate in Australia doubled – the property market in Australia was seemingly out of control as more and more investors flooded in, immigration numbers rose and fuelled housing demand and greater numbers of local first time buyers were forced to mortgage themselves to the hilt to get on the housing ladder.

By 2003 it seemed so inevitable that the market was booming and that because what goes up must come down a bust was looming, but here we are in 2007 and prices have started rising again – up 8.3% on average in 2006 from just over 2% in 2005.

So what happened to real estate in Australia between 2003 and 2007?

Australia managed to successfully manage its property based economy, it slowed activity down, it reduced inflation with interest rate rises, it caused stagnation in the most seemingly overblown markets and instead of crash landing in a ball of flames, Australia’s property market touched down, regrouped and is now off again – albeit at a much more sedate and healthier pace.

So, instead of worrying about a global property market crash you should be hoping and praying that your government can learn from the example set by Australia which seems to have a stable and attractive real estate market with strong levels of sustainable demand and just enough affordability to maintain buoyancy.