Now is the time for hesitant property investors to make a move

After a sluggish winter, spring brings hope of fresh movement in Australian property sales. According to the nation’s leading property, accounting and wealth financial advisory group, Chan & Naylor, this is a great time for those with investments in housing, but anybody hoping to join the property ladder down the line now has a conundrum to face: Australian property is high in demand and supply is low.

Despite recent figures from The Economist stating the Australian housing market is overvalued by 36%, and reports locally and abroad concerned over an apparent property bubble in Australia, now is the time for hesitant property investors, including first-time buyers, to make their move if they want in on the Australian dream.

Moreover, if Australia is to avoid the boomerang effect taking place around the world, whereby millions of adult children are returning home to reside with parents into their 30s, it is crucial that first-time buyers start considering property investment as a way into the market rather than focusing initially on home dwelling options.

Potential investors sitting tight for a bubble to pop could be waiting a long time.

According to a recent study by KPMG, 60 years ago house values in Australia stood at roughly seven times the yearly household income and today that figure stands at a very close 6.9%.

Property values have remained on an upward trend with modest corrections within a cycle, and there are no signs to suggest we are heading for a major downward turn.

High living standards, low and controlled interest rates, relatively high population growth, undersupply and a healthy banking system are only a few reasons why buying property in Australia is an attractive option for personal occupancy or investment. In fact, demand is undeniably set to grow.”

Some of the key drivers contributing to the rise in housing demand include:

• Retirement of the baby boomer generation and the widening skills gap left behind require further skilled talent to replenish skills and the tax base, which will inevitably come from abroad;
• The wealth and opportunity offered by Australia, which attracts skilled migrants from neighbouring countries each year;
• The steady entry of five million Generation Ys into the market, which, according to projections by the Australian Bureau of Statistics, will raise the demand for housing by 15% on the previous generation, as more attempt to edge away from the family home;
• A diminishing amount of available land for new housing, as people flock to city hubs;
• A lack of government initiatives to ensure Australia has an adequate housing supply; and
• The sum of these things will keep the value and cost of existing housing high.