News Limited newspapers
November 10, 2012
HOW important is the world-wide housing market? Does it really have an impact on real estate in Australia?
Whether selling a semi in Sydney’s inner west, a beach house in Port Douglas, terrace in St Kilda or an ordinary four-bedroom single-level home on 600sq m – what true impact stems from the fact units in New York are in recovery, family houses in the UK are still at 2007 prices, interest in housing in Dubai is on the up while in Madrid prices are still down?
Well, as recently as a decade ago, the reality was the rest of the world’s housing market played very little part in ours. That said, the very high end has always been influenced by overseas markets. At that level it does become a truly global market because the number of people who can afford homes over $30m is an elite bunch.
But as for mass housing stock for us normal folk, the influence would have been negligible.
What has changed is the increase in access to information and the availability of data on international housing in recent years and that is affecting our opinions and confidence in relation to our own market here.
There are two ways overseas housing markets can affect Australian house prices. First, Australia is a relatively safe haven for real estate and for many nationalities it is a very desirable place to buy a home for investment and residency.
This means there have been times when we have enjoyed huge influxes of buyers from the UK for example, although the strength of the Australian dollar combined with their struggling housing market means this buyer stream has all but dried up.
Asians have been buying property here in increasing numbers, showing how strong overseas housing markets can lead to increased buying.
There are suburbs in each city that are preferred by certain nationalities for living or investing and it can be worthwhile targeting these buyer groups when selling your home.
Second, news and information on property abroad does affect our perception of our own housing market.
This influence from overseas is really all about market confidence. With recent financial disasters across the world we are more nervous than ever that the pestilence will infect us. And this can be self fulfilling.
But Australia has a different banking system, a different approach to debt and responsibility to our mortgages and extremely low default rates. As a country demand out-strip supply, unlike in the US, and we have lower agent commissions and entirely different real estate systems.
So don’t let overseas sentiment unnecessarily influence you but do keep an eye on the demographic mix of your suburb. If it is changing, overseas influence on your local market can be closer than you think.
Andrew Winter is a real-estate consumer champion and the host of Selling Houses Australia on Lifestyle
Read more: http://www.news.com.au/realestate/buying/are-we-safe-as-houses-from-the-global-market/story-fndban6l-1226514162748#ixzz2By1Z4UBc