Environment analysis
The stable economic environment
Recently, Australia local real estate portal Domain unveiled two global reports, pointing out that the Australian property performed very well in capital market transparency and safety respectively.
According to the 26th survey on global real estate investment conducted by AFIRE (Association of Foreign investment in Real Estate), Australia is listed as one of the countries with the most stable and safe real estate investment environment in the world in 2018.
AFIRE is the largest real estate investment institution in the world, with over 2 trillion Australian dollars under the management of all its members.
For investors, it is very important for a country to have a stable economic environment, which determines the level of market risks. The Australian real estate market has maintained a stable growth trend for many years. According to the statistics of RESIDEX, the real estate
price in Australia has increased every 10 years on average in the past 30 years, which means that the real estate price will double every 7 to 8 years. Moreover, the average annual rental return of 4-7% is easily supported by rent, and the income of house price and rent keeps growing.
Education and immigration drive population growth
Australia has abundant educational resources and scientific research level, and excellent teachers force students from all over the world to choose to study in Australia. Meanwhile, the export of education industry is also one of the important economic sources of Australia.
And more foreign students mean more demand for housing, more demand for renting or buying. In addition, the comfortable life and high level of social welfare are also important reasons to attract a large number of overseas elite immigrants here. Data shows that the average annual new immigrants in Australia are about 150,000 people, greatly exceeding the housing supply. Education and immigration have laid the foundation for the demand of the housing market, making investment in Australia more secure.
Housing market analysis
"Transparency" lays the sustainable development of the real estate market
According to the report of JLL, Australian property ranked as the second around the world on transparency. The investigation involves an overall assessment of factors such as land availability, regulation, transaction processes, property rights and the legal environment and so on.
The stability of Australia's economic environment, the transparency of its regulatory and legal systems, as well as the high level of ethical governance and industrial norms have attracted a large amount of investment capital from both commercial and residential properties. The main reason for the high transparency of Australian real estate market is that compared with other countries, Australia has a very rigorous and perfect legal system to define and protect property rights and provide an open, fair and orderly bidding process.
In addition, the Australian housing price is formulated with the participation of many parties, which will be publicly quantified by Banks and other professional evaluation agencies. In addition, the government departments have made long-term statistical analysis of the local regional housing price, and the overall housing price and profit are basically completely transparent.
Standardized housing operation market
The Australian government has strictly regulated the qualification examination and approval of personnel engaged in the real estate industry, including lawyers, agents and brokers. The professional personnel that is engaged in estate activity must have certain certificates, corresponding practice experience, and exam qualification certificate, after they are registered, they just can practice, which is very normative.
Australia has the most perfect system to protect real estate holders, whether it is to buy or sell houses or to rent houses. For overseas buyers, the clear and transparent operation of the market ensures the safety of investment, and buyers do not have to worry about and can completely do not go out of the home to invest from overseas.
Construction is strictly controlled and vacancy rate is low
In recent decades, the annual increase of Australian housing price is also closely related to the number of immigrants. A great growth of population every year greatly drives the domestic demand. However, the Australian government strictly controls the housing examination and approval, and the housing construction volume is far behind the population growth, which even leads to the situation that it is difficult to rent a house.
According to the international practice, the reasonable housing vacancy rate is between 5% and 10%. At this time, supply and demand are in balance, which is conducive to the healthy development of the national economy. If the vacancy rate is between 10% and 20%, it is a dangerous area. Some measures should be taken. If the vacancy rate is above 20%, it is a serious backlog area. However, the annual vacancy rate in Australia is basically below 3%, far lower than the world average. According to the statistics of the government, the population of Australia increases by 3800 people every week on average, and the annual immigration quota is about 200,000. It is expected that the housing demand in Australia will exceed the supply by 663,000 units in 2031.
The advantages of freehold
Australia is subject to the tradition of British common law, and private ownership is its core foundation. Most of the land in Australia is under private ownership, and the owner owns the permanent property right and inheritance right of the land without inheritance tax. And it is one of the few developed countries in the world that does not have a property tax, effectively reducing the cost of long-term holding.
Low down payment, flexible portfolio
Australia is very attractive to overseas investors for its low down payment, flexible asset portfolio, low investment risk and sufficient financial leverage. A low down payment of 10% (for local buyers) is affordable for most people.
Compared with stocks and funds, real estate is the most stable investment project. In addition, 10% down payment in Australia is deposited in trust accounts, which are subject to government regulation and can be paid with interest, completely risk-free. After buying a house, it is easy to raise interest by renting, or even realize the asset combination of "one suite for two suites, two suites for four suites" by cashing out the value-added part from the bank, and use financial leverage to maximize the benefits.
Huge appreciation potential
In Australia, due to a variety of comprehensive factors such as government regulation and economic stability, the trend of housing price is quite stable, approximately doubling in seven to ten years.
Analysis of legal system
Angie Zigomanis, head of BIS Oxford University's institute of economics research, said: “Australia's housing market is doing well. The data shows that Australia has not experienced a recession in 25 years, and real estate price growth is very strong in most regions. In addition, the overall political stability of Australia is also an important factor to attract overseas investment. Investors see investment potential and capital security here.”
Many people who are not familiar with Australia will worry about whether there are legal risks in buying real estate in Australia. First, Australia has a strong system of checks and balances, a well-respected judicial and law enforcement system, and an open, effective and transparent legal framework. In addition, Australia's real estate market is subject to strict national regulation, and buyers are protected from various risks. It is mainly reflected in the following aspects:
1. Proper division of responsibilities to avoid the formation of united interests
Australia has a short history, but its system is rigorous, which is reflected in all fields. For example, Banks bear market risks independently to ensure that they can objectively evaluate the real estate value and market risks when providing mortgage loans and avoid financial risks and excessive investment. Relevant government departments should independently undertake the examination and approval responsibility for all kinds of information, and relevant processes should be made public synchronously. The developer shall strictly follow the approved construction plan, and the final approval document shall be incorporated into the owner's purchase contract and subject to public supervision. This avoids the formation of united interests, greatly protecting the buyers.
2. Australian real estate transactions force lawyers and agents to participate
The sale of real estate in Australia must be through a qualified agent to participate, and the whole process requires the involvement of lawyers. Australian house purchase contract involves various professional knowledge which cannot be fully mastered by the general owners or sales personnel. Both parties must have lawyers. Even if there is no element of contract, it is mandatory to buy a house through lawyers. In this way, owners do not have to worry about illegal operations.
3. The down payment is deposited in an independent trust account
Overseas buyers are most concerned about whether the down payment is safe when buying uncompleted apartments. Under the law, the down payment in Australia must be deposited in a trust account jointly supervised by lawyers and the government. Neither the developer nor the buyer is allowed to use the money. After the settlement, the person buying a house inspects the house and accepts without error before paying remaining money. That is to say, developer is able to obtain money only after passing the inspection. If the developer goes bankrupt, the government will return the 10% down payment and interest to the customer, which is of high security and guarantees the most basic interests of each customer.
Analysis of details
From the perspective of above-mentioned environment, market and legal analysis, Australian real estate market has become a stable and safe investment choice with less risk. In addition, the performance of Australia's real estate in details cannot be worried.
1. Elaborate decoration
All the apartments in Australia are elaborately decorated. In addition to the basic decoration, the apartments in Australia are equipped with almost all the necessities such as microwave oven, dishwasher, dryer, natural gas, air conditioner, oven, carpet and curtains and so on. Soft furniture such as beds, sofas and refrigerators is prepared by owners.
In addition, Australian construction industry has excellent quality and strong sense of design. The quality from Australian local developers of real estate is very good, and the appearance of low depreciation even can keep it ten years as new. Many Australia's biggest developers are world famous and often build amazing buildings.
2. Perfect post maintenance
Most of the apartments and communities in Australia are very clean and tidy. On the one hand, residents cherish it and will not destroy public property, create garbage, etc., The more important point is the perfect property management. From the initial screening of tenants, the leasing management company will give priority to the quality of tenants, and select well-paid white-collar workers with stable income to ensure the quality of tenants. In addition, the body corporate will carry out daily cleaning of the apartment, regular cleaning of the carpet, maintenance of swimming pool/gym and other facilities, fire safety inspection to ensure that the building maintains a safe and comfortable living environment.
To sum up, throughout the Australian market, there are impeccable conditions in terms of environment, housing market, laws and details, making it the safest choice for people seeking overseas investment.