With property prices surging across the country, it seems everyone wants to own a piece of Australia. Property prices across Australia increased by on average 12 per cent last year, with further gains of 8 to 10 per cent forecast for 2010.

The forces driving the growth are many and varied, but in simple terms, we see it as follows:

What is driving the prices?

1) The existing 190,000 shortfall of available housing
2) The 30,000 additional annual shortfall in supply versus demand
3) Ongoing record immigration rates (285,000 migrants arrived last year)
4) The shortfall in the release of developed land
5) High state taxes and fees
6) A lack of government planning and coordination
7) A tight rein on credit for
a. Developers
b. Prospective buyers
8) Confidence in Australia’s strong economic recovery and prospects

Who is driving the prices?

1) Repeat buyers or upgraders (about 60% of the market)
2) First time buyers (now less than 20% of the market, down from 30%)
3) Investors (strong and growing)
4) Overseas buyers (not quantified, but anecdotally very strong, and growing, particularly from Asia)
5) Baby boomers looking to set up for retirement
6) Migrants who have saved for a home of their own

The key message is that property prices are rising for many good reasons, and there are many people who have worked out where property is headed and who want to be part of it.

The huge growth in property prices in China has also given Chinese nationals with access to student visas or work permits the chance to invest in Australia as an attractive alternative. Given their vast numbers, the obvious need is to get in early to benefit from the ongoing upswing in demand from this source.

In summary, for whatever the reason, and whoever is doing the buying that’s driving property prices, you have to be ‘in it to win it’. If you are holding back, maybe you should ask yourself why, particularly as the demand from investors is increasing by the month.

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