Australian real estate in overdrive

Posted: March 4, 2015 in Uncategorized

The Australian real estate market, with the latest rate cut, went really in overdrive – specially in Sydney and Melbourne.

Brisbane has still some pockets of value.

As everything heightened demand will spur an increase level of construction (specially in Sydney there are new apartment blocks built at every corner) which will damp the price.

It is the classic demand/supply effect.

There are also more dark aspect to it. Chinese investors in real estate property increased 400% between 2006 and 2014 (Font University of Western Sydney). And this is just the normally declared foreign owner (there are quite easy way to circumvent the issue without appearing in the stats).

There has been quite a large increase last year – as the Chinese Government is cracking down on corruption and shadow banking, it is only logical that Chinese will try to “get the money out” and buy property at any price….as long as they are out of the Chinese government grasp.

The Australian Government knows this, but at the moment you cannot risk to stop the only Australian engine still pumping.

Just do not believe the hype….everything has a cycle.

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