(Pictured: Gold Coast – South of Brisbane)
What makes Australian real estate investment a fundamentally sound investment decision? Population growth combined with economic growth. These two factors, coupled with political stability, are without a doubt the paramount factors needed to support a thriving real estate investment market.
According to the Australian Bureau of Statistics, the Australian population grew by 1.6% in the year ending March 31st 2017. In comparison, the World Bank reports that the German population grew by only 1.2%, the French by only 0.4%, and that the Italian population actually declined by -0.2%. These numbers are indicative of the European Union’s overall population growth rate of only 0.4%.
Furthermore, Australia’s growth rate is double both North America’s (0.7%) and the East Asia & Pacific Region average (0.7%). While sheer population growth alone is a rudimentary metric, these figures clearly point to Australia as an investment opportunity worth seriously considering. A growing population guarantees a growing demand for real estate options, whether they be residential, retail, or commercial.
In addition to domestic population growth, the real estate industry is also heavily influenced by both the influx of international tourists, and the foreign worker and international student populations. After all, these are all additional people who need rental properties and/or shorter term accommodation, and office and other work and study spaces. In all of these areas, Australia shows stable to strong growth.
The International Visitors Survey, conducted by Tourism Research Australia, reports an 8.7% increase in international visitors in the year ending June 2017. This equates to an extra AU$40.6 billion pumped into the Australian economy, and an additional 7.9 million people requiring accommodation for a total of 266 million nights. Remember, this is in addition to the strong growth rate of the permanent resident population.
In the area of foreign workers and international students living, studying, and working in Australia, the numbers are also on the rise. The Australian Government granted an additional 6.1% of Skilled Temporary Work Visas (subclass 457) in 2016 when compared to the previous year. The Australian Government Department of Education and Training also reports international student numbers increased 15% between July 2016 and July 2017. With some of the most stringent immigration policies in the world, these figures speak significantly of Australia’s overall trend towards well regulated, high quality population growth.
Australia’s real estate and property market is supported by a highly effective legal system, with the country ranked 15th out of 190 economies for ease of doing business. This system is created and maintained by the long term political stability of the country. Such is the Australian government’s willingness and ability to support the industriousness and commitment of its workers and investors that 2017 Index of Economic Freedom ranks Australia 5th in the world.
‘Australia, a vibrant free-market democracy, has recorded impressive economic progress unmarred by recession for more than 25 years. In addition to abundant natural resources, the economy has benefited from an effective system of government, a well-functioning legal system, and an independent bureaucracy, all of which have facilitated robust entrepreneurial development.’ 2017 Index of Economic Freedom
What makes Australian investment a fundamentally sound real estate investment decision? Steady population growth that includes a significant proportion of skilled and economically sustainable immigrants, backed by one of the most stable systems of government in the world.
Image source: Matt Barrett