While the 2008 US mortgage led crash decimated many economies around the world it is worth noting that Australia was one of the few that did not crash into a recession. A mixture of a generally buoyant economy together with massive dependence upon mining and natural resources helped paper over any other cracks brought on by the worldwide downturn. Even though the mining industry has slowed down of late, due to a relatively benign worldwide economy, interest in Australian real estate has remained very high.
However, it is also worth noting that the Reserve Bank of Australia (RBA) recently cut base rates to 2% which is a record low for the country. While this is still significantly higher than the 0.5% in the UK, and even lower levels elsewhere around the world, it is impacting the Australian dollar exchange rate. So, many experts believe we will see further reductions in the Australian base rate in the short/medium term.
Will Australian property remain in vogue?
Those who follow the Australian real estate market will be well aware that experts have talked down this particular investment arena many times over the last decade. Headlines have tried to make us focus on of an imminent crash, foreign investors have come under pressure but so far markets such as those in Sydney have remained extremely strong. Even though the slowing Australian economy will obviously have an impact upon the real estate market it is unlikely we will see a significant correction in the foreseeable future.
Due to the geographic nature of Australia there is often intense pressure on some of the larger towns and cities creating pent-up demand for properties. Even though some of these areas are now expanding outwards into areas which were not feasible from a financial standpoint it will take some time to balance the market. In essence, very much like the UK property market, there is a significant shortage of new build properties in areas of interest.
Will London, Tokyo and San Francisco continue to perform?
If one thing is evident over the last decade it is that the likes of London, Tokyo and San Francisco are in effect real estate markets of their own. They may well be part of the general property market in the country in which they are situated but the fact is they have a life of their own. Overseas investors have obviously played a major part in these particular markets and will likely continue to do so while the worldwide economy struggles.
In many ways we have seen the likes of London, Tokyo, San Francisco and Sydney becomes safe havens for those looking to invest in real estate. The fact that capital flows into the global real estate market have risen from $295 billion in 2009 to an incredible $1 trillion in 2014 says everything about their perceived safe haven status.