Freak Weather No Problem for Australia Property Market

Always a favoured overseas property destination of choice, particularly by Brits in search of a new life in the sun, Australia’s property market remains popular, despite residents in some of the country’s most sought after areas suffering from some of the worst weather conditions in living memory.

A recent report published by the Investment Property Databank and the Property Council of Australia states that Australia’s property market delivered a healthy total return of 16.9 per cent during the year to June 2007, with capital invested in houses prices enjoying double digit growth over the past decade whilst the commercial office property sub sector generating the strongest return of all at 17.5 per cent.

Commenting on the 3rd Quarter Housing Data released by the Australian Property Monitor, General Manager, Michael McNamara confirmed “Melbourne, Canberra and Brisbane property markets are booming. We are seeing robust conditions at the premium end of all these Eastern capitals, which are having the most significant effect on the latest very strong results.” Ever-popular Sydney enjoyed a mini boom and subsequent price rises of 2.2% while house prices leaped to their highest point in six years in Melbourne, jumping 6.5% to an average of just under $400,000 (approximately £170,000) with prestige markets seeing enjoying double digit growth. Canberra came out on top though, with a 7.4% rise this quarter, taking its average unit price up to $319,000, a rise of 17.6% over the year, making it the most heated of the Australian property markets.

But whilst these price rises are obviously welcome though further exacerbate the affordability problem for first-time buyers and families moving up another threat to Australian house prices is rearing its head as experts express concern that the recent freak weather, much of it focused around the country’s New South Wales and Queensland areas and home to Australia’s most desirable coastal locations of Canberra, Melbourne Brisbane and Sydney, may cap these prices as investors become wary of buying in a property zone prone to disaster. The concern is that property purchasers seeking respite from adverse weather conditions at home will look instead to buying in a location with a more stable climate. A report out today by the Climate Institute indicates temperatures rises of just a few degrees resulting from climate change could lead to an increased risk of annual bush fires by nearly 300 per cent by 2050 in some Australian regions. More recently bush fires are causing summer chaos, the horror of their heat then quenched by freak snow, monster hail and a tropical cyclone. Emergency services have seen their calls go from firefighting to flood rescue in a matter of weeks. Parts of New South Wales, the state with the uncomfortable accolade of having the country’s most extreme weather, has suffered from massive rainstorms and hail, reminiscent of April 1999, when a hailstorm caused half a billion pounds worth of damage in Sydney’s eastern suburbs – in 15 minutes. Indeed, we like to think of Sydney as being one of the most desirable places in the world to live, its reputation as a laid-back, sunny paradise disguising its other role of Oz’s freak weather capital. Tropical Queensland has suffered from uncommonly high temperatures and electrical storms, while parts of New South Wales were so severely affected by the extreme rains that the state government was forced to declare them natural disaster areas.

However, it seems that the allure of Australia remains constant, ranking highly in the property popularity stakes with a reported 25% of all Brits wishing to permanently repatriate overseas looking to Oz as their next home or retirees seeking quality of life. Population growth projections to 2050 in Queensland and Western Australia are roughly double the rate of those in the rest of the country and as a result, experts are clear about where long term Australian investment lies. Coastal areas or the fringes of capital cities are especially recommended for those with an eye on capital growth, in particular the areas to the north of Sydney, such as Maitland and Lake Macquarie, where local infrastructure is strong and the local economy diverse. Interestingly, Sydney itself has experienced a recent definite slowdown in unit pricing, coinciding with a population shift out into the cheaper suburbs. The property market in Australia may see some troubled times ahead but they do say, paradise is never perfect!