While the Australian property market is exposed to the slowing global economy and tightening credit, the sector is unlikely to suffer in the same way as the US and the UK markets did, according to a leading property expert.
John Edwards, CEO of Residex, hit out at doomsayers who have compared the falling housing markets of the US and the UK with the local market. "The merchants of gloom overlooked the fundamental differences between our housing markets and those of the US and the UK - to which they seek to compare us," he said.
Edwards said that unlike the US and the UK, where population growth rates are falling, Australia's population is booming. "Population growth directly creates housing demand and we're experiencing our fastest population growth in two decades. [Australia is] quickly moving towards 22 million residents with an annual growth grate of 1.5%, compared to a world average of 1.2%."
Also unlike these countries, where population is ageing and Baby Boomers are approaching retirement, Edwards noted that Australia is "rejuvenated" by the arrival of about 180,000 mostly skilled migrants. "These new arrivals offset the effects of the Baby Boom retirees, keeping our median age younger than either the US or the UK. They fill new employment opportunities and are creating the highest demand for new housing in our history."
The Housing Industry Association estimated that demand for new housing is in excess of 170,000 in 2007/08, while the current annual rate of completion is just over 150,000 - a shortfall not likely to decrease significantly in the near future.
Edwards added that apart from the possible further interest rate rises and some global uncertainty, Australia's economy is sound and showing good growth.
"There's also a significant fact: we've never had a larger amount of 'real' money flowing into the coffers of governments and institutional investors as a result of the last few years of economy good times. Once the gatekeepers shake off their cautious outlook and regain some confidence, there's every likelihood that these funds will be unlocked and find their way in even larger quantities into the housing investments and finance markets than before the sub-prime market crises, with good growth to come for investors in the medium term who will have picked their time well."