Low unemployment, a booming economy, record levels of immigration, and wage growth that is outstripping inflation are all contributing to a buoyant Australian housing market, according to a report published on February 28 by The Royal Institution of Chartered Surveyors (RICS).
“This,” the reports says “is in stark contrast to the US market which has dropped by -9% despite the Federal Reserve slashing interest rates on the back of the sub prime disaster, and could drift further if mortgage financing remains difficult. The UK market grew at 8% in 2007, but is expected to feel the full brunt of the credit crunch and flat-line in 2008 with zero growth.”
RICS Senior Economist, David Stubbs believes 2008 will deliver impressive returns for Aussie homeowners with house prices expected to grow at upper single digit levels (around 7-8%).
"The Australian market is looking really impressive at the moment, so much so that the Reserve Bank of Australia has continued to lift interest rates. We expect to see another couple of interest rate rises in 2008, which will price some investors out of the market, but with wages outpacing inflation and unemployment very low, there is plenty of support for continued growth.
"Tax cuts have been instrumental in propelling the Australian economy and housing market forward in recent years. The prospect of the Rudd government implementing its election pledge to cut taxes further, provides another reason to be positive on the medium term outlook for Australian housing market."