Australia’s expensive property market has been blamed on high population growth, few large cities and sprawling low-density suburbs, rather than low interest rates and the tax system.
They started to fall – particularly in Sydney and Melbourne – ahead of the Reserve Bank’s decision in May last year to begin lifting the cash rate. The RBA has increased the cash rate at its last nine consecutive meetings, with property prices in all capital cities now plummeting. LongView executive chair Evan Thornley said while many commentators focused on interest rates and tax concessions such as the capital gains discount as reasons for Australia’s high house prices, they ignored the key demographic factors affecting the property sector.
“Land appreciates, buildings depreciate – and Australia’s population dynamics mean our land appreciates faster and more consistently than almost anywhere else in the developed world,” Thornley said.