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Why Australia's property market...

Why Australia's property market won't fall

A casual observance of house prices over the past two decades in Australia may look troubling, however sources are saying that the housing bubble will not have a negative impact on the country's economy.

Parts of the housing market are oversaturated according to Business Insider Australia, however the periodical is keen to say that the markets won't have to crash to correct.

It reports that property markets "overcooked" in Sydney several years ago and the market settled after a sustained period of "sideways prices", which indicated a drop but did not instigate a crash.

Reports have shown that "data on prices suggests that things have slowed down" in both Sydney and Melbourne, as commented by RBA governor Glenn Stevens.

Perth is also showing signs of a slowing economy as it's working through the mining boom excess, but aside from these three, most other major cities are showing strong signs of growth.

This is one main reason why analysts are confident that Australia won't suffer from a real estate crash: as it has so many major cities and capitals, each with their own property market, if one fails it doesn't necessarily have a knock-on effect to another market's prices.

Australia's property market is also resilient, making it one of the most popular markets in which to invest.

Reports from RBA earlier this year showed that housing in Australia and its borrowers are in good shape as most loans are in the 70-80 per cent loan-to-value ratio. Similar figures have showed that on average, around 50 per cent of Australian homeowners are over a year ahead in paying off their housing loan.

This poses a positive outlook for the property market in Australia as most of its homeowners aren't reporting as being in debt.

Alongside the projection that house prices are more likely to go sideways rather than crash, the forecast for real estate in Australia looks good for 2016.

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

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