The Australian Property Market in 2010
Feb 7, 2010 Real Estate
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The property market in Australia, similar to other countries such as Canada, the United Kingdom and the United States is struggling to know where it will turn in 2010. Many predict an increase in property prices of more than 5% and other experts predict a drop of more 20% or more.
One of the main determining factors, that will affect the property market, will be employment. If unemployment rates rise, then only people who have a deposit will be able to purchase real estate and newly built houses. Many predict the unemployment will soar to as high as 8% (compared to 2009 which was 4.5%) and this will decide the real estate price tags.
The Reserve Bank of Australia cut interest rates by a huge 3% back in 2008 which helped many people with mortgage repayments and the new strict lending rules, issued by the Australian Government, cut down the amount of mortgages given to people who would struggle to meet the repayments.
The amount of repossessions coming onto the market has also been cut down due to these strict lending rules which have enabled the market to remain stable throughout the last few years.
The Australian Government has also started a new grant available for first time buyers to help them get onto the property ladder although, again, only beneficial if people can keep up the repayments on their mortgages.
With debt levels, throughout Australia being at an all time high, more and more people are borrowing from banks and credit cards to keep their heads above water. If they want to purchase real estate then even more debt will have to be taken on, which they can ill afford.
Many people throughout the country are having a hard time paying their debts and many have lost their full time work and are now working part time. In 2008 the amount of people in full time employment dropped by over 44 thousand and part time jobs increased by over 40 thousand.
Another factor that will affect the property market in Australia is the world economy. Countries such as the USA, Japan and other European nations are suffering a recession and even the big player, China is experiencing a slow down. Every country, all over the world will be affected and Australia, unfortunately, will not be spared.
Although predicted to be generally weak in 2010, the property market in Australia should hold out for the first 6 months or so, and the result of the unemployment issues will be a major deciding factor on where property values goes in the next couple of years.
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