Why Sydney real estate prices are too high ?

Out of reach … Surprising background of “Sydney real estate prices are too high

(Real estate prices in Australia’s three largest cities (Sydney, Melbourne and Brisbane) were flat until around 2009. However, due to the influence of one country, prices have risen, especially in Sydney, where real estate prices have reached levels that are not easily accessible. Mr. Morisaku Sunagawa, representative of Wide Estate Co., Ltd., which has been engaged in the real estate business in Australia for 32 years, explains the background.)

“Real estate prices” in major cities are higher than before the spread of corona infection

As a result of the Australian Government taking strong measures against corona … (* The photo is an image / PIXTA)


Real estate prices in Corona, Australia’s major cities, fell temporarily during the government’s compulsory “temporary economic dormancy” urgent measure, but then turned upward. rice field.


And as of the end of January 2021, real estate prices in cities other than Sydney and Melbourne were higher than they were when the new corona occurred


We also predicted that real estate prices between the two cities of Sydney and Melbourne could easily be expected to recover in a few months, partly due to measures to curb the spread of corona infection, government stimulus measures, and monetary easing. ..


And the rate of price increase / decrease in the past 12 months as of the end of February announced by real estate research company Core Logic is 2.8% increase in Sydney, -1.3% decrease in Melbourne, 5% in Brisbane . It rose 4.6% in Perth and 7.3% in Adrade, up outside Melbourne.

Real estate transactions in each city are still active, and I think the upward trend will continue in the future.


Sydney real estate prices soar after “2009”

By the way, I think that many people have the image that real estate in Australia is “expensive”.


In particular, Sydney’s real estate prices are by far the best in other cities and are “out of reach”. Specifically, at the entry level, one bedroom costs about 80 to 100 million yen, and competition is fierce.


Now, when do you think Sydney’s real estate prices have been out of reach like they are now?


Price increases have become noticeable in Sydney since around 2009. In fact, until then, there wasn’t much difference in the median real estate prices in Australia’s three major cities. To put it plainly, it was a price level that anyone could buy.


Rather, in 2009, the real estate market entered an adjustment phase due to the Lehman shock, and the situation was very difficult. The bottoming out and reversal of the market is common in the three major cities, but the rise in prices in Sydney and Melbourne, especially Sydney, has been noticeable since 2009.


What happened in 2009?

In 2009, “China money” flowed in due to the abolition of real estate regulations

Generally, foreigners cannot buy second-hand residential properties in Australia. However, if the main purpose is for students (international students) to live in, we also have special permission to purchase second-hand properties.


Here are some amazing facts.


Until 2008, foreign students will be able to acquire real estate in Australia in addition to “residential purpose”, “upper limit of purchase is 300,000 dollars (about 25.5 million yen), and second-hand properties are less than this amount. There is a condition. ”


However, in 2009, the upper limit was lifted, and if the main purpose is for students (foreign students) to live, it has been relaxed so that even expensive properties can be purchased.


What happened as a result?


In particular, a large amount of China money has come in to buy real estate in the name of a child studying in Australia. Normally, you can’t buy a second-hand property in residential real estate, but now that you can buy it in the name of a child (or lend it in the name), it’s easy to imagine a flood of China money.


According to statistics, about 70% of workers and international students migrating to Australia live in Sydney and Melbourne, and it is estimated that many people came from overseas and purchased second-hand properties under deregulation.

Of course, this is not the only reason for rising real estate prices. Many foreigners have made good use of this regulatory loophole to purchase good second-hand properties, and as a result, the fact that the actual price of real estate at that time has risen cannot be overlooked.


Is it because of the “Japanese” that the restrictions on real estate purchases were put in place?

There is another interesting fact. In Australia, it is still not possible to buy second-hand residential real estate by foreigners. When do you think the regulation was put in place?


The answer is from 1987. And, in fact, Japan is involved at this time. At that time, Japan was in a bubble era, and a large amount of Japan money flowed into Australia, buying local real estate.


At that time, Australia’s economy was small and its national income was low compared to Japan, so a sharp rise in the price of domestic residential real estate due to foreign capital would hurt the interests of the people. As a restraint measure, it regulated the transaction of used residential real estate by foreigners.


When the author explains at seminars in Japan that “Australia regulates the purchase of used residential properties by foreigners,” customers sometimes say, “It’s a policy to keep foreigners out.” However, it was unquestionably us Japanese who made the impetus for that policy.


Australia now has much higher economic growth, population growth and per capita income on GDP than Japan. However, I think it is an interesting fact that the measures taken because Australia was a small country at that time are still in progress.



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