Real Estate in Australia has been consistently attracting foreign direct investment from Asia as well as the rest of the world. However, Australian house prices fell in the second quarter for the first time in almost three years as the highest borrowing costs since 1996 deterred home buyers.

RBA – Australia’s central bank has increased the bank rate four times since last August in a bid to help cool the heated economy. Right now the benchmark borrowing rate is at 7.25 which was last raised in March this year.

According to Bloomberg, second-quarter house prices dropped the most in Perth, declining 2.4 per cent from the previous quarter, followed by 2 per cent in Hobart, 1.4 per cent in Canberra and 0.3 per cent in Melbourne. Sydney gained 0.3 per cent, Adelaide 0.4 per cent, Brisbane 0.6 per cent and Darwin gained 1.9 per cent.

Perth has always been a hot spot of investment for Asians from Hong Kong and Singapore, where many of them have chosen to migrate, or send their children to be educated in the tertiary institutions there. Many new property launches that are sold in Singapore are packaged with loans from Singapore banks. How would the fall in property valuations affect property loans that are taken out here in Singapore?

Hopefully I will have more information for all of you soon.