The Property Market In Australia for 2010

Experts are struggling to know where the property market in Australia will head in 2010. Like other countries such as the United States, Canada and other European nations some experts predict a drop of more than 20% in property prices, whereas others predict an increase of between 5 and 8%.

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.

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.

Debt levels are at an all time high in Australia, with more and more people borrowing from banks and credit cards to keep their heads above water. To purchase new properties or new builds will mean taking on extra debt which they obviously can’t.

Many home owners are having a hard time paying their debts and many have lost their full time jobs and are now working only part time. Part time jobs increased by over 40.000 in 2008, whereas full time jobs dropped by 44.000 in the same period.

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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