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.
The main determining factor that will affect property prices will be unemployment. If the unemployment rate continues to rise then it will be only people with deposits that can afford to buy real estate and new builds and many predict that the unemployment rate will soar to as high as 8%, compared to 2008 when the unemployment rate was 4.5%.
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.
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.
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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