Australian residential property prices have grown by 7.7 per cent compared to last year, which is greater than the global average, according to the Global House Price Index by Knight Frank. Global house prices rose, on average, 6.5 per cent in the year to March 2017 – the highest annual rate of growth in three years – prompting the Property Council of Australia to report that property remains an investment safe haven, across the globe.
Australia jumps 17 places in global property price ranking
Australia also jumped in global growth rate rankings from 37th position in the fourth quarter of 2016 – with annual capital growth of 3.5 per cent, to 20th position in March 2017, recording annual growth of 7.7 per cent.
According to the Index, eleven countries recorded double-digit growth in the year ending March 2017; a year earlier, only four fell into this range. Iceland leads the rankings, with average house prices rising by 17.8 per cent year-on-year.
Economic growth driving house price increase
Knight Frank, Head of International Residential Research, Kate Everett-Allen said that a number of factors have contributed to the increase in average house prices around the world – with economic growth being one key factor.
“The IMF (International Monetary Fund) forecast global GDP to rise by 3.5 percent in 2017, up from 3.1 per cent in 2016,” she said.
“Property’s reputation as a safe haven investment is another [factor], along with the greater availability of mortgage finance in developing markets.”
Robust outlook for property investment in Australia
According to Knight Frank, Global Head of Residential, Lord Andrew Hay, the Australian property market is “fundamentally healthy” with a positive outlook, the Domain reports. He says that Australian cities rank highly in terms of global desirability and will continue to attract high net worth individuals.
Lord Hay also predicts Australia will continue to rise in global desirability rankings over the next five years, due to the relative affordability of its major cities compared to other parts of the world, as well as Australia’s perceived stability and safety – which is a big drawcard for the world’s super-rich.
“High net worth and ultra high net worth individuals now prize stable locations with first-class educational institutions for their children, mature financial markets and transparent regulatory systems, uncorrupt governments and good eco/green conditions,” said Lord Hay.
“When you begin to group those things together, there aren’t many places in the world now where you can get all of that. But Australia is one of those places. It’s not just a safe haven – it’s also a very nice place to live.”
Play the long game
While the latest Global House Price Index figures are indeed quite strong, it is important to remain focused on the bigger picture, according to Ironfish Property Director, Grant Ryan.
“Property has been a consistent performer over the long term – which is why property investment is a long-term journey, delivering wealth over time,” said Ryan. “The longer you hold on to a property, the luckier you’re going to get.”
The Knight Frank Global House Price Index measures the global mainstream residential market across 55 countries, using data from official sources. It was established by Knight Frank to enable investors and developers to monitor and compare the performance of mainstream residential markets around the world.