If there’s one thing that Aussies and Brits have in common, it’s a constant fretting about the housing market – are prices going up or down? Are we at the peak of a price bubble? Should you rent until things calm down?
There’s no shortage of experts willing to offer answers to all of these questions but, in truth, only time will offer up the real answers.
The picture for new migrants is even more complex because, as anyone who watches the news regularly will know, the world’s currency markets are also in a state of unpredictable flux at the moment.
For new migrants, these two factors work in tandem to dictate housing affordability, which makes for a muddy picture indeed.
Take recent newspaper headline that average house prices in Sydney have risen almost 23% in the past 12 months. This, on the back of a 17% rise in the previous year.
If you already have property in Sydney, that’s probably good news. If you are trying to get onto the property ladder, not so much. In Melbourne, the trend was still upwards, although the figures were less spectacular at 10.3% for both periods.
Canberra paints a more mixed picture. From June 2013 to June 2014, the average price actually fell 0.5%, while in the last 12 months it has risen 5.4%.
Now comes the complicated part. When we came on our research trip to Canberra, in early 2013, Sterling was at a low point against the Aussie dollar, with a pound buying AUD 1.45. Today, largely due to falling mineral prices in Australia and the pound’s independence from the troubled Euro, a pound fetches just short of AUD 2.15. A more than 40% increase.
This compensatory effect of currency fluctuations changes things significantly. In Sydney terms, this creates a near neutral position for new British migrants, while for those looking elsewhere in Australia, buying power has increased significantly over recent years.
Of course, whether you still consider current prices to be a bubble, and whether you choose to rent in search of even greater potential value at a later date is a personal choice. The same goes for any moral or political view you might take on the broader issue of housing affordability in Australia.
But for new migrants, looking at house prices with reference to exchanges rates is a must, and may give an answer that differs widely from that seen by those already living here.
Meanwhile Canberra, which enjoys the highest salaries in Australia, and with house prices that have stayed largely flat while elsewhere they have boomed, looks an increasingly attractive proposition for those considering a move down under.