Welcome to BuyAssociation.co.uk

Australia: Property Prices

Overview

Property prices vary considerably throughout the country and in the various suburbs of the major cities. Not surprisingly, the further you are from a town or city, the lower the cost of land and property. Properties in central and popular beach locations cost anywhere between two and four times as much as similar properties in less fashionable or convenient outlying city suburbs. For many buyers it’s a choice between a small apartment in an inner city and a large detached family home in the outer suburbs – in recent years the average Aussie battler (commuter) has had to move further and further into the outer suburbs of major cities in order to find affordable accommodation.

A two or three-bedroom, single-storey home in most city outer suburbs costs between $110,000 and $185,000; four-bedroom, two-storey homes cost from around $150,000 to $375,000. On the other hand, waterfront properties in Sydney can be astronomically expensive and a reasonable two-bedroom apartment in an attractive building with water views costs more than $900,000 (2 million dollar homes are commonplace in Sydney, in Melbourne and on the White Sunshine Coast). There’s a high demand everywhere for waterfront properties, which have generally been an excellent investment, particularly in NSW where the government plans to preserve the coastline from further development (canal developments are already banned). In the current sluggish market, however, some may be overpriced.

After a period of large annual house price increases in the later ’90s and early 21st century, the Australian residential property market experienced a ‘correction’ in 2005. According to The Economist magazine’s house-price index, between 1997 and 2004, Australian residential property prices rose by 113 per cent (in the major cities, rises were closer to 200 per cent), with prices generally reaching their zenith in the third quarter of 2003. By the end of 2004, average house prices in the capital cities were around $550,000 in Sydney, $383,000 in Canberra, $330,000 in Brisbane, $319,000 in Melbourne, $280,000 in Hobart and Perth, $270,000 in Adelaide and $260,000 in Darwin.

An interest rate rise in March 2005 contributed to a market slowdown and some reductions in the above average figures. The remainder of 2005 is expected to see static house prices and maybe falls in some areas and sectors of the market. Analysts expect property oversupply and further interest rate rises to cause residential property prices to be sluggish or to decline in 2006 and perhaps also in 2007, before there’s an upturn in the market. These predictions are to be taken with a pinch of salt: predicting the movement of any market (e.g. the art, currency, property or stock market) is notoriously difficult, there being a number of (sometimes unpredictable) factors to take into account. If, however, the predictions are correct, the forthcoming two or three years will be a good time to enter the Australian residential property market. This is particularly the case in Sydney, where prices are predicted to fall the most. The property market in NSW has been depressed more than average by news of the introduction of a vendor duty tax from July 2005. Other Australian cities are expected to experience softer landings, with some analysts still seeing room for further price increases, especially in parts of Canberra, Melbourne and Perth.

Selling at auction has been popular in recent years, particularly when prices were rising. Around 25 to 30 per cent of homes in Melbourne are sold at auction compared with around 20 per cent in Sydney, around 15 per cent in Brisbane and 10 to 15 per cent in Adelaide.

A few kilometres can make a huge difference to the price of a property, with apartments in central areas costing up to $2,500 per square metre more than those in harbour-side developments a few kilometres further out. Land prices also reduce considerably from around 15km/9mi outside a city and are at their lowest around 25km/16mi from city centres. The cost of land varies from as little as $40,000 for an average size suburban house at least 25km/16mi from cities such as Adelaide, Hobart and Perth to over $350,000 for a similar plot within 15km/9mi of central Sydney (if you can find one). The cost of building a home varies depending on the location and the quality of materials used. Brick veneer costs from around $800 to $900 per m2, depending on the location. The cost of building a home increased considerably after the introduction of goods and services tax (GST) in July 2000.

In the last few years, there have been few bargains and it has been a sellers’ market, although you might have been able to negotiate a reduction of 5 or possibly 10 per cent. That has changed and buyers today can undercut asking prices more substantially and pick up a ‘bargain’. There’s usually a good reason, however, when a property is substantially cheaper than other similar properties. Although it’s sometimes unwise to look a gift horse in the mouth, you should generally be suspicious of a bargain that appears too good to be true. On the other hand, most sellers and estate agents still price properties higher than the market price or the price they expect to receive, knowing that buyers will try to drive the price down, so always haggle over the price asked (even if you think it’s a bargain). This is, in fact, one of the few occasions in Australia when you’re expected to bargain, although you should try to avoid insulting an owner by offering a derisory price, even in the current uncertain market.

If you’re buying a home for a limited period or as an investment, you should buy one that you hope will sell quickly and at a profit. Homes that sell best are exceptional period houses of character with lots of original features, and water and beach-front homes (particularly in Queensland, although sales of apartments in Brisbane hit a six-year low in the first quarter of 2005), which are in high demand and can be let for most of the year to holidaymakers if required. Luxury units in central Brisbane, Melbourne and Sydney have also been a good investment, but some are currently overpriced. Buying property in Australia is usually a long-term investment and isn’t recommended for those seeking a short-term gain (this is particularly true at the moment). You must pay capital gains tax on the profit made on the sale of an investment property.

You can find out the price of homes in any Sydney suburb through the Sydney Morning Herald Home Price Guide, which lists all the sales results (both auction and private treaty) in Sydney suburbs for the last 12 months (it can be ordered on the internet from Australian Property Monitors, www.apm.com.au). A similar service is provided by newspapers in other major cities, and you can also peruse property advertisements in a number of publications on the internet (e.g. www.sydneyproperty.com.au).

© Survival Books Limited 2006

“Buying a Home in Australia & New Zealand” 1st Edition, Graeme Chesters.
Reproduced with the permission of Survival Books Limited.

Further information on this topic can be found in “Buying a Home in Australia & New Zealand” 1st edition, by Graeme Chesters.

For extensive information about buying a property in Australia & New Zealand, you can purchase this book at www.survivalbooks.net

More pages

Page 1: Overview

All you need for a beautiful bathroom - at affordable prices

UK Investment property from just £34,500 High-quality student rooms in an emerging market with 10% net yield guaranteed

Discounted hotel rooms in the UK - click here for Laterooms special offers

Advertise Your English Rental Property simple, effective and affordable marketing online!

Calculate how much you can earn - rent out your UK holiday home here

Holiday homes to rent - across the UK & Ireland

UK property insurance from intasure - Click here for great deals and up to 40% risk related discount on UK & overseas insurance