Finance

The Australian Property Market in 2010

Similar to countries such as the United States, Canada and the United Kingdom, the property market in Australia is struggling to know which way it will turn in 2010. Some experts predict a drop of more than 20% in property values whereas others predict a 5% increase 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.

To help people meet their mortgage repayments, the Australian Reserve Bank, back in 2008 cut interest rates by a massive 3% to help people meet their mortgage repayments and with strict Government lending rules now in place, the amount of mortgages given to unqualified people has been significantly reduced.

These stricter lending rules have also reduced the amount of repossessions on the property market which has enabled the Australian property market to remain relatively stable in 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.

The world economy is another determining factor that will affect the property market in Australia. Other countries such as European nations, the USA and Japan are all suffering a recession and even the big player, China is experiencing a slow down. All over the world will be affected and Australia will not be left out.

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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