Australian House Prices

Analysts generally give all the reasons why Australian house prices will fall, but few tell you how property can go higher.

Here’s a few ways…

Tax cuts are one.  Any across the board tax cuts for business, means business can afford to pay more in rent for office or industrial space. Likewise, tax cuts for wage earners means they can afford to pay a little more for houses.

Infrastructure is another. Any increase in infrastructure spending will cause higher property prices where it goes in. Say a new freeway cuts a two hour journey into 30 minutes, that must do something for property values.

When new infrastructure is built like this, the value of the surrounding land simply increases. A new train station for example obviously makes nearby houses more desirable and increases their sale value.

How else can Australian house prices increase?

Better public transport connections all send property prices higher. Money spent on roads and rail lines can only do one thing and that is bring higher property values. As an investor you need to watch government infrastructure plans, because the government is telling investors where to buy for price growth.

Then there’s population growth, and increases in immigration which are hugely beneficial for property prices.

Investment from overseas, particularly from Chinese seeking a secure property rights system like ours, are another factor to keep property prices high.

Loosening in lending standards can lead to higher property prices. If people are able to borrow more, that will feed into higher house prices.

And jobs growth is one of the key indicators you can look at to gauge the future direction for property values. Look closely at unemployment levels, while unemployment remains steady it’s most unlikely there can be any major fall in property prices.

If the economy is growing that will all feed into property prices. So now you know, there are factors at play in the economy that can keep house prices high as the real estate cycle progresses.

What We Can Learn from Japan’s Property Market

Back in the 1980s, Japan went through a period of record low interest rates that fuelled an asset bubble to record highs…sound familiar? The bubble pushed the stock market and real estate prices to new heights…and then it burst in 1992. It was devastating.

The Special Structure of Real Estate Investment Trusts

REITs need to have the bulk of their assets and income connected to investments in real estate. They must invest at least 75% of total assets in real estate and cash. They need to derive 75% of gross income from sources related to real estate, including rent.

Is THIS as Bad as It Gets?

Our central bank hasn’t taken us down the road of no return, yet. But we now find ourselves at a pause. Aussie economists are licking their fingers, putting them in the air and seeing which way the wind blows.

Have Banks Put their Needle in the Housing Bubble?

Normally, interest rates are to blame when property prices head south. With each rate move higher, more would-be buyers decide that they will sit on the sidelines. It also makes it tougher for those already in the market. However, property investors can’t blame the RBA this time.

Aussie Banks Toying with the Property Market

Aussie property hasn’t lost its cachet, yet. But prices, as you would have seen, continue to fall. The fall likely has more to do with borrowing ability than confidence. However, there’s one thing the Aussie property is telling us. It’s proving the complete ineffectual role of banks…
Money Morning Australia