The Australian dollar has appreciated sharply in the past month as investors look for a safer, cheaper alternative to the United States’ $3,700 monthly mortgage.
However, analysts say the Australian housing market is in its infancy, with the number of properties available being limited and rising prices likely to continue to drive home prices higher.
According to a survey by homebuilder and property agent Apartment Guide, more than half of Australians aged 20 to 34 have at least one property they are considering renting.
Australia’s property market is also experiencing an upswing, with sales volumes increasing by double-digits in 2016 compared to 2015.
ApartmentGuide’s annual survey of homebuyers in Australia found that more than 4,000 homes were purchased for a total value of $10 billion.
“While the national housing market has begun to see some gains, it is still not a particularly safe environment for renters,” the company’s chief economist, Michael Devereux, said in a statement.
“It’s becoming increasingly difficult for investors to get in on the ground floor.”
Apartment Guide is not the only property-based investment platform to be warning of an upsurge in home prices.
Last week, the Australian Real Estate Association warned of a “housing bubble” and called for a stronger financial regulatory regime to “keep people safe from predatory lending”.
In a report titled “Australia’s housing market in a bubble”, the association highlighted a recent report from the Reserve Bank of Australia which showed “a significant rise in the number and type of properties being marketed and sold for short-term profit”.
It said there had been a “large increase in the sales volume of property that has been offered for short term profit” and warned that “unfortunately, the rental market is now in a high risk environment”.
“The risks are clearly greater than ever,” the report said.
The RBA has already introduced stricter lending standards in a bid to curb speculation.
Rising prices are expected to continue in the short term, with many Australians being priced out of the market altogether, according to Apartment Guides.
There have been some reports of investors in the homebuilding sector who are looking to buy in the property market.
However these developments have been rare, with some properties in Sydney being available for rent for $1,000 per month, while properties in Melbourne for $800 per month.
In Australia, the national average rent for a two-bedroom apartment is $1.15 million, according the Australian Bureau of Statistics.
While it is not uncommon for Australians to rent a property, Apartmentguide’s survey found that only a minority of Australians are looking for a property.
When it comes out of school, most Australians rent an apartment or share a home with family, according Apartment guide’s data.
Aboriginal Australians are also more likely to rent than non-Indigenous Australians, according a report by the Aboriginal Housing and Social Policy Institute.
At the end of June, the Reserve bank also issued a statement warning of a housing bubble, with rates rising across the board.
According to the bank’s annual housing affordability report, the number in the “market for rental housing” grew by nearly a third to 19.1 per cent from July to August, the fastest rate increase in 20 years.
In 2016, Australian households made about $2,300 more per person than in 2015.
Property prices are currently rising at the fastest pace in 20 year and will continue to do so in the foreseeable future.