Australian Property Investors – Why is Property Investment so Popular in Australia

What makes Australian property investors different from property investors in other parts of the world? Well a complete answer would take a lot more electrons than I have here but to me there are several characteristics that those down-under have which are distinct from property investors in other countries.

Australians don’t have the same entrepreneurial drive as some nationalities – say many Asian countries or Americans. Yet Australians have long invested in property with an ethusasim which is not seem in countries such as Europe or America. In fact arguably the only country more obsessed with property investment is New Zealand. Why is that? Well most of it comes down to tax and general laws, rather than national identity!

Melbourne - a robust property market

In comparison to America, Australia doesn’t make it easy for entrepreneurs – being declared bankrupt is the end of your career as a business owner or even company director in Australia. In America some of the biggest names have been through several unsuccessful companies and bankruptcies before success. They would never have been allowed to continue to raise money if they had lived in Australia. Perhaps those who in America have the will and personality to start a company channel the drive into property investment in Australia?

In tax terms Australian regulations encourage to a reasonable extent the Australian fascination with property. Although Australia does have both sales tax on purchase and capital gains tax it is possible to claim property depreciation in some circumstances and mortgage interest almost always. In contrast New Zealand offers a regime with no capital gains or sales tax on property – which is why it is home to some of the world’s most ethusasitic property investors.

Australians who have sufficient assets can also include investment property within their self-managed superannuation – providing some significant tax advantages for those past 40 or so.

Australian property, in general, is one of the strongest markets in the world. That is not to say that Australian property never goes down – it can certainly be a wild-ride for those who fall for over-priced apartments or invest in small towns where the single employer just left. In general though Australian property prices are a great deal higher than those in America. The reason is somewhat surprising – supply! Yes, in general, there is a shortage of property in Australia. How can that be in a country with one of the world’s lowest population densities? Quite simply, complex and mulit-layer bureaucracy involved in the planning regime for new developments. It can take years and years for developers to get permission for new land releases.

So property investment will continue to be popular with Australians. With the difficulties of business start-ups combined to the robustness of property prices there is certainly money to be made – but caveat emptor is the order of the day in the current market!