2009/02/03

There are a number of factors that make the Australian property market an attractive place to invest in, says a leading property figure.

"The current global uncertainty and the lack of available credit, the Australian economy has slowed but the situation is not as dire as in the UK or USA," says Scott Picken, CEO of International Property Solutions, who recently travelled to that country.

"Australia also has four of the top 15 most secure banks in the world, which gives stability to the market. In addition, government initiatives and falling interest rates have helped stimulate demand, particularly at the affordable, first-time-buyer level.

Falling interest rates over the last four months have reduced mortgage costs by some 30% and affordability is rising dramatically. The rate of new construction has fallen behind population growth, intensifying pressure in an already congested rental market – the market is currently undersupplied by some 100,000 homes per year.

He says the Foreign Investment Review Board regulates who can invest in Australia, and non-residents are only allowed to buy new-build houses or apartments from developers.

The average rate at which one can obtain a mortgage is 6,2%. "The banks work on one's personal affordability when determining how much one can borrow, and non-residents can expect to work on a 70% to 80% loan to value ratio," says Picken. They also take into account 80% of your rental income.

"It is clear where the market activity is and we believe investors should focus on the $350,000 to $600,000 range in either inner city apartments or houses which are in strategically good locations," Picken says.

Although one should always time one's investment carefully, Picken points out that there are several benefits to investing in Australia now. In addition to certain sectors of the market starting their upturn again and a strong rental market, owning a home overseas, investors have a potential rand hedge that can also build up tax credits and their credit ratings in Australia which could ultimately assist them in getting citizenship.

"The most important factor with Australia is that each year they allow 177,000 immigrants into the country and they either have one of two things: Vital skills or money, both ensuring that Australia continues to get stronger and stronger as a country! Understanding these long-term fundamentals are vital to ensure long-term success."

Property24

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