Australia avoided a house price crash like those of Western economies because of its high and growing economic wealth at a time when developed economies were contracting. At the same time it avoided a credit boom by retaining strict lending requirements. Australia’s geographic position also helped, supplying a booming Asia with raw materials, goods and services.
The government response was timely too, it introduced a generous scheme to support first time buyers in 2008. This, and continued immigration fuelled demand against a shortage of new supply which helped to keep prices growing.
Australian GDP grew by 2.7% in 2014, which was higher than 2013’s 2.1%, but down on the 3.7% growth achieved in 2012.
The unemployment rate is comparatively high, at 6.0%, in part due to a slowing of the country’s mining industry, which had supported the economy for two decades. Australia’s slowing economy is in part due to its strong ties with cooling Asian markets and global demand for raw materials has declined.
In spite of this, residential prices have continued to grow. Interest rates are at a record low of 2%, having been cut 25 basis points in May 2015. The market is further supported by foreign nationals, notably the Chinese, who need approval from the Foreign Investment Review Board (FIRB) to purchase property (in common with all overseas buyers), and are restricted to new property or vacant land.