Is now the time to buy Australian property?

When the Banking sector and financial markets went into turmoil during the Global Financial Crisis people were asking, what would happen to Australian property?

The flight to quality was on, as people liquidated out of the money markets. Trillions and trillions of dollars “moved” into cash. This cash looked for a “safe” haven.

After the previous major World Stock market crash back in October 1987, when the Dow Jones fell some 23%, and the Australian all ordinaries fell some 42%, WHY did Sydney house prices then RISE by 70% in the 3 years immediately following the stock crash, and Melbourne by over 50%?

Cash needs a home. Many ordinary investors who panicked, and were burnt, felt very reluctant to reinvest in similar financial instruments and stock markets again.

Many people who chased those high returns then moved back to investment fundamentals and for many people that means property. Then during the recent Global Financial Crisis (GFC) we saw a similar thing happen again as history repeated itself.

Some housing markets around the world collapsed. But what was, or is, so SPECIAL about the Australian housing market that seems to make it immune from the effects that plagued some the other world real estate markets?

Firstly, the Australian economy remains strong, and as is now well known was very resilient during the GFC. In fact Australia had had 24 years of uninterrupted annual growth.

This economic resilience provides a safe, low-risk environment for international investors.

The Australian economy is:

• the world’s 13th largest
• entering its 24th year of uninterrupted annual growth
• rated triple ‘A’ by all three global rating agencies forecast to have average annual real GDP growth of 3.0 per cent between 2015 and 2019
• increasingly tied to fast-growing economies in Asia
• supported by high productivity levels, with 16 out of 20 industries rating above the global average
• diversified and services-based
• an important contributor to five sectors expected to drive future global growth: agribusiness, education, tourism, mining and wealth management
• home to the world’s third largest pool of funds under management and the largest in the Asian region