The massive rise in house prices in both Sydney and Melbourne, over the past few years, has led to concern that today’s university students will be locked out of the property market. The speculation is that by the time our university students are ready to invest in Australian property, the market will be well out of their reach.
Reasons for the Australian property boom
On the one hand we have the RBC keeping interest rates low, which in the short term should make it easier to purchase property. On the other hand, we have the increasing interest of Chinese buyers in our property market, which is apparently pushing prices up.
Recent research has suggested that Chinese buyers only totalled around 2% of the property transactions last year, which makes it unlikely that Chinese money is elevating property prices. Instead, they are simply taking advantage of our low interest rates.
These figures however, don’t take into account the apparent increase in illegal foreign money coming into Australia that is being laundered into our property market. With the crackdown by Canada on its investor visa program, there are a lot of Chinese investors now looking at the Australian market as a likely investment opportunity.
On top of these issues, the recent slowing of the Chinese economy and the devaluing of their currency makes our real estate market look like a very safe haven indeed – a place where the Chinese can park their money for the long term.
What does this mean for Australian students who want to buy property?
The problem is that there has been little to no checks and balances on Chinese investors buying existing Australian properties through nefarious means. All of this might change soon, since Canberra announced a crackdown on illegal investments in Australia with those convicted, being forced to sell their properties.
On the face of it, Australian students may find that when they are ready to buy property in Australia, we will have emulated Canada and put a stop to excessive foreign investment. I wouldn’t hold my breath on that though and would suggest that it is better to jump into the property market, sooner rather than later.
Property in other capital cities and in more rural or regional areas is still very affordable and within easy reach of our younger generation, who are just entering the market. So if you want to explore your options in the real estate market, NPBS offers one of the most competitive fixed rate home loans in Australia – and a fixed rate will protect you from any unexpected rate rises for up to five years.
Hi, my name is Cathy Reyes, member of the digital marketing team behind one of Australia’s longest standing building societies offering a variety of home loans. When not working, I enjoy reading novels by Nicolas Sparks and Tom Clancy. If there are 3 things I’d like to see in my lifetime, it’s the reforestation of devastated rainforests, sustainable living, and free education for all.