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.
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.
A new grant given to first time buyers by the Australian Government has also helped, however, this is only beneficial if the people can keep up with the monthly repayments.
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.
Thousands of home owners, throughout Australia are having a hard time keeping up with their repayments as many have lost their full time jobs and are now only working part time. A drop of over 44 thousand people in 2008, in full time employment was seen and an increase in part time employment of over 40 thousand in the same period.
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.
Overall, it will be the unemployment issues that will affect the property market in Australia and although predicted to be generally weak in 2010, it should hold out pretty well for the first 6 months or so but where it heads in the next few years is uncertain.
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