It’s a tough question to answer, as there’s a lot of uncertainty in the world today, with Donald Trump becoming the President of the United States and the UK on the verge of making Brexit official. Australia cannot be immune to that.
Keeping this in mind, here are the biggest factors that affect the real estate market in Australia in 2017.
#1: Trump’s win
Donald Trump will have been sworn in as the 45th President of the United States by the time you read this article. That was perhaps one of the greatest shocks in the history of US politics. Trump’s win will have a major impact on the Australian economy, and by the same token on the real estate market, as nobody knows where he stands on various issues. It can be positive or negative for Australia, or a mix of both. It remains to be seen.
Prime Minister Theresa May has indicated in a recent speech that she would prefer to go for a “hard Brexit”, which means a clean break with the European Union and from the European single market. So this is expected to change a lot of things in Britain and the Eurozone. Australia won’t be immune from this as Britons are among the biggest buyers of Australian properties.
#3: The situation in China.
Chinese investors are the biggest buyers of homes and apartments in Sydney and Melbourne. So real estate observers in Australia are watching the economic situation in China very closely. Last year, we had more wealthy Chinese investing in overseas properties as a reaction to the stock market crash back home in China. Investing overseas, especially in Australia is seen as the safe thing to do, and as a way to protect their financial assets. So how well the Chinese economy does will have a direct bearing on apartment prices in Sydney and Melbourne, certainly.
#4: Interest rates.
The Reserve Bank of Australia is likely to keep interest rates low or to reduce them further to encourage investment. But it’s unlikely that the banks would follow suit and lower interest lending rates as well. We expect banks to keep the rates high to restrict lending.
#5: Demand to remain high.
The REA Group Property Demand Index for 2016 was at its highest point towards the end of the year. We expect this to continue. There will be a high interest from overseas investors in Australian real estate. The demand will be the highest in New South Wales and Tasmania, and much less in Western Australia and the Northern Territory.
#6: Perth offers the best opportunities.
With property prices sky high in Sydney and Melbourne, one expected foreign investors to look at the other cities in the country. Perth should get a lot of attention as the home prices and rental rates here are much lower than the national average, which means there is a plenty of room for growth.