Impact of China and India on Australian Property Prices in 2010

Australian Property Investors and people thinking about investing in property in 2010 need to understand the huge hidden impact on property prices due to the emerging economies north of Australia. These economies are having a profound impact on the Australian property landscape and these changes have to be considered by anyone looking to buy a property in Australia.

The Turbo charged Economies of China and India are expected to grow at least 3 times faster than the Australian Economy.

The reality is China will grow at close to 9.5% in 2010 and India at 7.5%. The consensus among Australian Economist about the growth of the Australian Economy for 2010 is 2.5%. (optimistic)

The GDP of the US is growing at 1.5%… Europe is at 1.5%… (at least it’s growing…finally)

Comparatively China’s economy grew at 8.9% and India at 7.2%.

What is the impact on Australia? Well, we’re benefiting from the Chinese and Indians who are giving the biggest boost to the growth in Australia. The Australian stock market will be a major beneficiary of China’s growth next year, especially the resources sector.

Asian real estate will grow consistently throughout 2010.  Especially places like Indonesia, Korea, Vietnam and Thailand along with India, China and Hong Kong.

The Main question is what impact will all this have on Australian Property Market in 2010 ?

What I have seen already happening in Sydney for the last 5-6 years is that Chinese buyers are buying property in areas where there are good Public Schools (both Primary and High Schools). Now the Chinese are very focussed on providing the best and cheap education to their kids. It is seen as a way to improve their wealth and lifestyle, becoming their number one priority. The focus of these Chinese nationals is to scout around and find the top performing schools in a city and then moving to that area. Once their children are settled in these good schools they will purchase a property in that area.

Infact property prices are pushing through the roof in these areas.

Consider suburbs in Sydney like Eastwood, Waitara ( Public School), Beecroft, Epping, West Pennant Hills and Killara (High Schools). Some of these suburbs have seen price growth of over 20% in the last couple of years.

Well-cashed-up Chinese are already making an impact on the Australian property market in a lot of areas. They are single-handedly pushing up prices by 5-10%. The Koreans, Japanese and Indian’s are also focussed on these best performing public schools.

In Melbourne the influence of the Chinese buyers on property prices is even greater. Look up areas like Kew, Hawthorn, Balwyn, Toorak, Balwyn North, Box Hill and Glen Waverley, and you will find that Chinese buyers have been very active. The shire of Boroondara includes some top private schools of Melbourne. Cashed up Chinese are looking to buy in the $1 million and $2.5 million property price range.

This trend has emerged over the last few years as the Chinese economy has grow rapidly and created a growing number of rich business people who because of the previous dubious history of the Chinese government, want to invest their money in a safe country like Australia.

The added bonus for them is that their children can get high quality education and a open lifestyle in Australia.

Australian property investors need to make serious note of the impact of this on property prices and decide which areas will give them the best capital growth in years to come. Surely Chinese, Indian and Korean nationals and their collective habits will drive property growth in certain areas.

If you would like to share your personal experience or thoughts on this topic please leave comments below. If you would like to find out how RBA Property can help you identify these changing trends please give us a call or email.

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