Classic Real Estate

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.

Probably the main determining factor in property prices will be employment. Only people who have a deposit will be able to purchase real estate and new builds if the unemployment rate continues to rise and some predict that unemployment rates will soar to as high as 8%, compared to 4.5% in 2008.

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.

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.

To help first time buyers get onto the property ladder, the Australian Government now offers first time buyers a grant, however this is only really beneficial if people are able to keep up with their mortgage repayments.

Throughout Australia, debt levels are at an all time high, with more people borrowing from credit cards and banks to keep their heads above water and for people to purchase new properties they will have to take on more debt, which unfortunately they can’t.

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.

The property market in Australia, although predicted to be generally weak in 2010, should hold out fairly well in the first 6 months or so, however it will be the employment issues that will be the deciding factor as to where the property market heads in the next few years or so.

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