by Jeremy Zhao
CANBERRA, Jan. 4 (Xinhua) -- As Australia's Bureau of Meteorology confirmed that 2013 was the hottest year on record in Australia, the real estate market in Australia has also seen its heat went up, attracting much attention from both local and foreign buyers.
Strong demand, short supply, weaker Aussie dollar and record low borrowing cost were the main factors that pushed the housing prices of Australian cities to a new high.
According to the RP Data-Rismark December Home Value Index, Sydney has the most expensive property market and also the strongest price growth. House values rose by 14.5 percent in Sydney in 2013, pushing the city's median price to 655,250 AU dollars (587,800 U.S. dollars). This was followed by Perth and Melbourne, where values increased by 9.9 percent and 8.5 percent respectively.
After a 3.8 percent annual fall in median dwelling values in 2011 and a further 0.4 percent annual fall in 2012, continuous rate cuts to record low by Reserve Bank of Australia lured both investors and first-home buyers back.
In fact, housing has turned into a buyers' market. More often people read headlines about record auction clearance rates, huge auction crowds and ordinary homes selling for way above reserve prices.
Foreign investors, especially wealthy Chinese buyers, also helped fueled the property boom. Based on National Australia Bank' s research, one in every eight new properties built this year were sold to foreign buyers, up from one in 20 properties in 2011.
According to accountancy firm IMA China, China's rapidly growing middle class will reach 320 million by 2022 compared to 160 million now.
"This is a great opportunity for Australia but it won't be without its challenges," said Michael Clifton, Australian Trade Commission's senior trade commissioner in Shanghai.
Australia's property agents already felt the astonishing purchasing power from China's wealthy families. The most expensive home sold in Australia this year is the 52 million (46.6 million U. S. dollars) Altona Mansion in Point Piper in Sydney. The buyer was an investment company whose sole director is Xiuzhen Ding, a Chinese-born resident of Elwood from Melbourne.
Another trophy sale to a Chinese buyer also on the waterfront at Point Piper was the 33.5 million (30 million U.S. dollar) Bang & Olufsen house. Yet another Chinese investor bought a 17 million ( 15.25 million U.S. dollar) stunning three-bedroom penthouse in Sydney's CBD for his children attending university in the city.
On the other hand, there has been a consistent short supply of new homes in recent years due to shrinking building and construction activities and high material and labor cost.
There has been a call for policy reforms. The Housing Industry Association (HIA) has warned that a housing crisis is inevitable unless a further 30,000 homes are built each year as population growth outpaces construction of new houses.
"Australia's population has continued to grow at an above- average pace and official projections show this is expected to continue," HIA economist Geordan Murray said. "To date, there has not been any commensurate boost to the supply of new housing. It is time for policymakers to acknowledge the imminent policy challenge that this situation poses."
Given current conditions, 2014 is estimated to be another good year for the Australia property market.
"Despite the strongest annual value growth since 2009, the rate of growth was not that startling given the low interest rate environment and the previous successive years in which home values fell," RP Data senior research analyst Cameron Kusher said.
He said the main challenges for 2014 would likely be the impact of forecast unemployment growth, affordability constraints, and whether regulatory changes will be implemented to cool the near- record high levels of investor activity.