As Australian as kangaroos, beer and ... home ownership

The pressure to own a home provides a key to understanding the Australian character. It's about freedom.

Brigid DelaneyOctober 11, 2009 09:49Updated May 30, 2010 12:08

An advertising sign for a new housing development area is seen with the Melbourne skyline in the distance, May 5, 2009. (Mick Tsikas/Reuters)

MELBOURNE, Australia — In a typical Australian household, when it is not football, cricket or rugby that dominates dinner table discussion, it's property being discussed.

Likewise, property is the subject of news reports, and the talk of the town for a large part of Saturday.

The chatter is about what the prices are doing, how the market is behaving and whether now is a good time to hold onto investments or try and cash in your chips.

For younger people wanting to play the property game, the questions revolve around whether they'll ever be able to afford their own home.

With an ownership rate of around 70 percent of the adult population, Australia sits alongside Canada, New Zealand the U.K. as a nation with the highest concentration of home ownership in the world.

Yet there are some key differences between these countries.

Since the global financial crisis began, a hole has been gouged in the housing markets of the U.S. and the U.K., while Australia’s property market has held firm.

And the Reserve Bank of Australia last week endorsed the strength of the country's economy (Australia's economy was the only one in the developed world to expand in the first half of 2009) by raising interest rates, increasing its key cash rate by 25 basis points to 3.25 percent.

Christopher Joye, an economist and managing director of global funds management company Rismark International told GlobalPost that the global financial crisis has had little impact on Australian property prices.

“In Australia in 2008, house prices fell by only 2.8 percent. House prices in 2009 are up 4.9 percent," he said. "We’ve recovered all the losses in 2008.”

Which is what those desperate to get into the property market are noticing — there is no depressed and deflated market so the young and unleveraged can gain a toehold.

The prominent investment commentators, David and Libby Koch, wrote recently in a newspaper column that “the Australian residential property market currently defies all investment logic and is likely to remain that way for the time being. House prices overseas have plunged over the past year but ours have stayed steady while a shortage of rental property has kept rents up. It’s all because of a lack of supply.”

Compared with the rest of the world, our residential property prices are 10 to 30 percent more expensive, and with the supply problem set to worsen due to population growth, it is unlikely that prices will drop.

According to Joye, “Australia has the strongest population growth in the [industrialized] world right now. It’s the strongest since 1971 — and a huge driver of demand."

CommSec chief economist Craig James says: “We’ve got the fastest population growth of any advanced country in the world, and really up there with some of the developing economies, faster than a lot of the Asian economies. We’re not building enough houses, so there’s a housing shortage."

Potential buyers agree.