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Housing Prices Climb as Supply Plays Catch Up in Australia Property Market - 7 May 2010

With the gap between supply and demand doubling over the last year, experts are suggesting now is the time to buy Australian property.

The demand for homes is so high in Australia, a report by the National Housing Supply Council suggests, that the number of new residential developments needs to increase by 30 percent in the next 20 years.

New South Wales and Queensland experienced the greatest supply-demand gap between 2008 and 2009 with about 60,000 homes each. Across the country, the gap increased from 99,500 properties to 178,000 in the year.

One of the factors contributing the rise in supply-demand is the corresponding rise in Australia’s population. In recent years, many Europeans have been moving Down Under, since the country wasn’t hit as hard by the global recession. In fact, Australia is often lauded to be about a year ahead in economic growth compared to other industrialized nations. Consequently, however, developers couldn’t keep up with the surprise demand and were slow to build.

The conundrum is good news for Australian homeowners and potential overseas investors as the population is only supposed to continue to grow, along with housing prices. In the third quarter of 2009, prices rose 4.2 percent, and experts have predicted that average prices in most capital cities—especially Sydney, Adelaide and Melbourne—would increase between 11 and 19 percent by 2012.

Further proving confidence in Australia’s real estate market is that more retail development is also on the horizon. U.S.-based, shopping centre giant Westfield recently announced it would spend $800 million (about £531 million) to build several centres in Australia, where the company is having greater success with occupancy and rental growth than in America.

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