Why Australia?

 

Why Invest in Australia?

The Australian economy has experienced significant growth over the last 21 years. As a strong performing economy, the country continues to invest in infrastructure to improve performance, and Australia’s population growth endures at a sustainable pace. Whilst Australia has not experienced wild increases in asset values, neither has the country felt the massive declines experienced in other parts of the world.

The Australian economy has experienced significant growth over the last 21 years. As a strong performing economy, the country continues to invest in infrastructure to improve performance, and Australia’s population growth endures at a sustainable pace. Whilst Australia has not experienced wild increases in asset values, neither has the country felt the massive declines experienced in other parts of the world.
 

Did you know?

Australia has a housing shortage of 230,000 dwellings, and this figure is growing.

The Australian Government provides incentives for the construction of housing  developments, and new rental properties.

There is very strong rental demand in Australia caused by low vacancy rates.

STABLE POLITICS AND ECONOMY

Australia consistently ranks highly for political stability and government efficiency, while the economy holds stable housing, strong banks and an impressive fiscal balance sheet.

SOLID LEGAL FRAMEWORKS

Australia has strong corporate governance laws that ensure ethical behavior, as well as efficient legislation and intellectual property protection.

NATURAL RESOURCES AND LOCATION

Australia consistently ranks highly for political stability and government efficiency, while the economy holds stable housing, strong banks and an impressive fiscal balance sheet.

GROWING POPULATION

Australia has a growing population due to a higher birth rate over mortality rate, and increasing immigration. The population is forecast to reach more than 30 million people by 2034, a significant increase of 30% over the next 20 years from the current population of 23.2 million.

HOUSING SHORTAGE

As stated previously, Australia has a growing population, and as a result more housing will be needed. There is a current estimated housing shortage of more than 230,000 dwellings nationwide, and as population growth exceeds housing growth, this gap is increasing.

Optimistically, this gap may begin to close over the next 5 years, however to do this, councils need to approve developments and builders would need to build dwellings above record rates. This is highly unlikely in the current environment and more realistic estimates indicate the gap will continue to widen to more than 600,000 dwellings in demand.

NUMBER OF DWELLINGS NEEDED TO BE BUILT TO COMPENSATE FOR CURRENT SHORTAGES

The data clearly indicates investing in property in Perth (Western Australia), Queensland and New South Wales will address the current capital city vacancy rates and provide opportunities for development. However, investing in South Australia and Victoria does not suggest lucrative returns, as these states are not experiencing such severe shortfalls in housing.

INVESTOR INCENTIVES

The demand for housing not only stems from the needs of homebuyers, but also from investors. Australia has an aggressive tax structure that ranges from 19% to 45%. In order to attract investors into the property market, the Australian Tax Office (ATO) offers attractive tax benefits to investors.

These include:


Negative Gearing - This term refers to borrowing money to make an investment. When the costs of the investment are higher than the return, it is negatively geared. In the meantime, a high-income earner can benefit from this by offsetting the loss against their taxable income.


Depreciation - One of the other tax advantages in owning an investment property is claiming for depreciation of certain items to reduce taxable income. New properties yield greater depreciation. Investors can claim two components, the building as well as the fixtures & fittings. This further helps investors to hold investment properties.

STRONG RENTAL DEMAND

The significant supply shortage of houses in Australia, as noted above, has resulted in a general increase for rental properties. This increase in rental demand has made Australian property more attractive to investors.

CAPITAL CITY PROPERTY DATA AS AT MARCH 2013
 
 

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