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The Overpriced Rates Of Australian Property

By Jamie Richardson | December 17, 2020

The Australian real estate market has always been a flourishing market. Even with the recession and other political factors over the years, the rates have always been skyrocketing. The Australian property is said to be overpriced at 30-40% higher than the average property rates globally. There are certain reasons for the market trends and industry fluctuations that lead to this change. Moreover, the change in the government policies and the interest rates also factor as a major aspect in determining the rates of property in Australia according to top property valuers in Australia.

Reasons For Over Priced

It has been known that there are certain restrictions over the owning and developing on the land. The factors that create these scenarios are the government policies. The real estate developers or gurus have suggested that the government has in several cases restricted the possession of the land and because of the shortage of the land for owning, there has been a case that the people are facing the shortage in supply of the land. Thus, this shortage causes a rise in the cost of the land and thus the prices of the estate are high constantly. Even if the construction and development of the real estate is not as high as compared to a few other countries, the land price causes the overall price of the real estate to skyrocket. This has been said as the major factor as to why the real estate in Australia is overpriced than some other countries.

One of the other reasons that lead to a rise in the property rates is the fact that the real estate and land prices will rise in line with the rise of the income. Thus, as the working income of the economy sees a gradual rise, the real estate prices see a rise in line with it.

Current Scenario

Though however, the Australian prices seem to be steady in the last years of the previous decade. The prices seemed to have risen between the 1990s- 2000s because of the increase in the overall household income and after that it has seen a rise but with a fairly low graph of the increase. Generally, it is the case that the real estate industry sees a rise until the rents and interests have risen to a point that the property and land prices can be considered as overvalued. After that they see a gradual decline in the rates, which also happened with the Australian real estate market. The only difference being they are still at a higher rate than most other countries.

Moreover, the Australian property has seen a hike in the price and interest rates for the purchase of the real estate as the investment has become a wide market in the real estate industry in the past few years. The Chinese investors have looked into the market and seen a greater potential, probably also anticipated the rise in the interest rates and chosen the Australian market as a major investment source for the real estate. Thus, the foreign acquisition of the land and the property also cause a high rise in the interest rates and the prices of the property. Thus, the Australian real estate market sees a price decline only when the rates of the interest and the rent go unsustainable.

Covid-19 Situation

Even with the current pandemic situation, the Australian real estate prices seem to be overvalued. With all the markets seeing a gradual fall in the price of their real estate globally, the  recession rates seem to be falling right opposite to the Australian market. Sydney and Melbourne have reported the highest interest rates over the time of the pandemic in Australia. These Australian countries were said to have a pricing system more overvalued during the pandemic than New York and Singapore combined, suggested the reports of the real estate market global.

Conclusion

Thus, even with a global pandemic and an international recession, the prices of real estate in Australia did not drop. More of this has to do with the fact that the government regulations and the planning committee have restricted the land supply which in turn affects the prices of the real estate. As it turns out, the Australian economy can still afford the rates of the on-going market trends and will follow the classic pattern of decreasing the rents and the revenues when they reach a point of unsustainable increase. 

Jamie is a 5-year freelance writer who enjoys real estate. He is currently a Realty Biz News Contributor.
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