Sydney set to lose spot as Australia's largest city: study

Sydney may boast a sparkling harbour and Bondi Beach, but Australia's biggest city is set to be eclipsed in population terms by its southern rival Melbourne, according to a study published Tuesday.

The report by economic forecaster BIS Shrapnel says a lack of affordable housing in Sydney would see the city's annual population rise miss the state government's projection of 1.1 percent growth for 2015 to 2020.

"Melbourne, with its long-term population growth of 1.3 percent a year, will displace Sydney as Australia's largest city in 2037," said Aaron Gadiel, head of the property development group Urban Taskforce, which published the research.

The report found that in 2001, Sydney was home to 660,000 more residents than Melbourne but this had slipped to a difference of 500,000 by mid-2009.

"The gap between Sydney and Melbourne is already closing rapidly -- Sydney's lead has been reduced by 20 percent over the space of just eight years," Gadiel said. "Over the past decade, Melbourne has proved far more capable of accommodating extra people than Sydney."

The cities are already by far the most populated parts of the country, with some 4.4 million people living in Sydney and 3.9 million in Melbourne. The third most populated city is Brisbane with just 1.9 million people.

Gadiel said that before Sydney property prices skyrocketed in the late 1990s and early 2000s, its state, New South Wales, had maintained a steady 42 percent share of Australia's total immigration.

But he said this figure was now falling as house prices continue to soar and insufficient new housing stock becomes available -- with about 30 percent of foreign migrants settling in the harbour city.

He said without an adequate housing supply, New South Wales would be unable to support the economic growth needed for an increasing population. "What drives our economy is the activities of people. Housing people is at the fulcrum of it all," Gadiel told ABC Radio. " Not only does housing provide jobs itself, it also gives us the opportunity to house and attract people to our economy who can make a difference."

New South Wales state Premier Kristina Keneally brushed off the report. "Sydney is Australia's only global city and there is no credible evidence to demonstrate that is going to change," she said.

From StarProperty

Does this mean that buying a property in Melbourne now will attract higher appreciation over 20 years as compared to buying a property in Sydney? Possibly, but due research should be done before committing to any property anywhere. Again, just my 2 cents worth.

Formula 1 Circuit in Melbourne

Australia Central Bank: Home prices ‘quite high’

A point to note before jumping into the property bandwagon in Australia. Apply caution.

Glenn Stevens … ‘I think it is a mistake to assume that a riskless easy guaranteed way to prosperity is just to be leveraged up into property.’ — Bloomberg

SYDNEY: Australia’s central bank governor Glenn Stevens said house prices are “getting quite high” and signalled that interest rates may need to be increased further to contain inflation.

Speaking in his first television interview since taking the helm at the Reserve Bank of Australia in September 2006, Stevens told Channel Seven it was important for borrowing costs to be returned to “normal” levels. The interview was recorded in Sydney on March 22.

“It’s not wise to leave interest rates right down at rock bottom any longer than you need,” Stevens said. “It would not be doing people any favours to have a prolonged period of very low rates and then hammer them unexpectedly.”

Stevens this month increased borrowing costs for the fourth time in five meetings, in part to contain house prices. The central bank will keep its overnight cash rate target unchanged at 4% in its next policy announcement on April 6 before increasing the key rate on May 4, according to a Bloomberg News survey of 22 economists.

“I think it is a mistake to assume that a riskless easy guaranteed way to prosperity is just to be leveraged up into property,” Stevens said. “It isn’t going to be that easy.” Australian house prices surged 11.8% in the year through January, according to a Feb 26 report by realestate monitoring company RP Data- Rismark. The country’s property market is “very buoyant,” central bank assistant governor Philip Lowe said on March 25.

“These prices are getting quite high,” Stevens said yesterday. “I’ve got kids that within not too many years are going to want somewhere of their own to live and you wonder how is that going to be afforded.” A gauge of housing affordability published last month by the Housing Industry Association (HIA) slumped 18.4% last quarter, amid rising population growth, borrowing costs and dwelling prices. The HIA predicts around 152,000 dwelling commencements this year, fewer than the 190,000 required by higher population growth.

Sales of newly built dwellings fell 5.2% in February from January, the Canberra-based HIA said in a report emailed to Bloomberg News yesterday. Sales rose 9.5% in January from the previous month.

Prime Minister Kevin Rudd, who must hold an election within the next 13 months, announced yesterday A$50mil in spending as part of the government’s A$512mil Housing Affordability Fund. The spending “will help unlock housing supply,” he said.

“There are not enough new houses being built to accommodate a rapidly growing population, and this is putting upward pressure on prices and rents,” said Brian Redican, a senior economist at Macquarie Group Ltd in Sydney.

“This leaves policymakers with the Catch-22 of having to balance the risks of warding off rising house prices with increasing interest rates, while at the same time trying not to discourage stronger residential construction.”

Traders are betting there is a 52% chance of a quarter-point rate increase when the central bank next meets on April 6, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 10.32am.

The Australian dollar traded at 90.51 US cents as of 10.52am in Sydney from 90.58 US cents late in Tokyo on the previous trading day. To stoke demand for property at the height of the global financial crisis following the collapse of Lehman Brothers Holdings Inc in the United States, Australia’s government tripled grants in late 2008 to first-time buyers of newly built dwellings to A$21,000. Those payments were cut to their original level of A$7,000 on Jan 1.

The central bank is monitoring whether the government’s decision to relax rules on foreigners who buy local property is stoking a surge in house prices, Stevens told a finance industry conference in Sydney on March 26.

The “question of the role of foreign purchases is an important one and it’s one we’re giving some attention to,” Stevens said at the time.

“Hard facts” about the trend were difficult to find, he added. Stevens said on March 2 that Australia’s economy would probably expand at or close to trend this year amid increased investment on new mines and resources projects such as the Chevron Corp-led Gorgon natural gas venture in Western Australia. - Bloomberg.

From StarProperty

Property Investment in South Australia

Another positive developement in Australia.

South Australian Property Council calls for `live in the city' bonus.

BIGGER grants should be available for first-home buyers who choose city apartments, the Property Council says.

In its pre-election platform, released today, the group has called for efforts to make city apartments more attractive to help the state meet its goal of 70 per cent urban infill.

Executive director Nathan Paine said changes to the State Government's affordability measures and more marketing support for high-rise buildings would benefit the entire city.

"I don't think there is any question that Adelaide is going through the same process Melbourne went through a few years ago," he said.

"Young people want to be in the city, they want to be close to the city, they want to walk to work, they want the lifestyle.

"More people living in the city means we will have a more vibrant and safer city, which will improve Adelaide for every South Australian."

The council's vision also calls for renewed investment in "thinking industries" such as renewable energy and biosciences and a renewed focus on making SA the destination of choice for migration.

"We are on the path to prosperity, and we will have population growth, regardless of what some people think. This is about making SA the best the state can be," he said.

The policy is aimed at three key areas - people, productivity and place - and calls on political parties for support or commitment in the lead-up to the March 20 state election.

It recommends greater focus on the attraction and retention of international students through a new taskforce to identify work and housing needs, but also pushes a new "student accommodation" planning definition against which councils should assess proposals. Another major thrust lies in boosting the attraction of multi-level residential developments through added marketing, changes to the concept of affordable housing to apply to transport-rich areas, and the consideration of first-home buyer stamp duty reductions.

"As our population booms, we will need to provide multi-level residential accommodation," Mr Paine said.

Source: http://www.adelaidenow.com.au/property

Brighton Beach - Adelaide

The question is WHEN? How soon?

Property Investment in Australia

Thinking of investing abroad? Australia may be a good option. Many of us have relatives and friends in this prosperous developed country. Australia has a multicultural society and is quoted as the second best place to live in the world. U.S. publication International Living has published its 2010 Quality of Life Index, which ranks 194 countries based on their quality of life. The index looks at nine categories: cost of living; culture and leisure; economy; environment; freedom; health; infrastructure; safety and risk; and climate.

Australia ranks No.2 : Countrywide access to an active and healthy lifestyle. Urban dwellers enjoy plenty of great culture, excellent food and a favorable cost of living.

For investment purpose, more importantly is the performance of Australia’s property market.

Australia property sales hit record

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1 March 2010 - Australian real estate prices are rising strongly and show no signs of abating, analysts said Monday, after weekly sales in one state hit a record 1.025 billion dollars (920 million US).

The Real Estate Institute of Victoria said last week saw "the largest dollar volume of transactions ever recorded" amid growing confidence in the economy as people took advantage of low interest rates.

"We've seen more physical sales in a week period, but never have they passed the billion dollar mark," research manager Robert Larocca told AFP.

"So that's partly a sign of how strong the market is and it's also a sign that people are spending more than they have in the past."

Larocca said the surge in sales was the result of historically low interest rates following the global financial crisis and the growing population in Melbourne, Australia's second largest city, outstripping available housing.

"People are confident, they are confident because the economy is going much better than they expected it to," he added. David Airey, president of the Real Estate Institute of Australia (REIA), said Melbourne was one of the country's strongest markets but noted that Australian property prices were in general very strong and rising.

"The property market in all Australian capital cities has had a rapid recovery from mid-2009 on, and noticeably in Melbourne and Sydney with property prices rising quite significantly over that six month period," he said.

"I think that will be reflected again this quarter with further growth in all capital cities." Airey said Australians felt property was a safe investment, with median house prices rising by 18.5 percent in Melbourne and around the country by more than 12 percent in 2009.

"And it's difficult to see this current period of growth stalling, unless it's caused by external factors and significant higher interest rates," he said. The average Australian house cost 334,100 dollars in 2005 and the REIA estimate for 2010 is 481,310 dollars.

By AFP – StarProperty

However, we still need to be careful when investing in property (all the more for oversea property). Read more on property investments – the leverage factor here.