The Property Market Crash?

The Property Market Crash?

There has been ‘talk’ ever since I can remember about how and when the property market will crash here in Australia. But contrary to popular speculation this is highly unlikely to happen because of the key crises which would have to take place in order to take down a property market such as ours.

For instance, many homeowners would have to be facing some serious hardships and as a result be forced to sell their properties into a market that was not interested in buying.

There are four major reasons that this could transpire and result in a collapse in housing prices, but frankly none of them seem eminent to Australia’s market.

Unemployment is one reason. But we’re talking huge jumps in the unemployment rate that would have to leave many homeowners facing mortgages that they could no longer afford. If this happened the market would be flooded with properties for sale. While Australia’s unemployment rate is still debatably high, the Australian Bureau of Statistics reports we have remained steady at 5.1% for some time now.

Interest rates could rise, but again they would have to jump so high that a wave of homeowners began defaulting on their mortgages due to over borrowing. Even though an increase is expected, there’s been no indication that the percentage will go so high as to have a crippling effect on homeowners.

Basically, any severe oversupply of housing would do the trick, but as a nation Australia actually has an undersupply. Although Brisbane does have a surplus of apartments, this kind of centralised saturation is not enough to cause a property market crash.

Last of all Australia would need to be on the brink of a USA style recession. This would stall economic growth and devalue our properties. But with Australia’s geographical proximity to some of the worlds up and coming economical driving forces like China, India and Indonesia our forecast is looking bright and sunny.

Another common factor that can affect property value is population growth, which we definitely do not have to concern ourselves with in the land down under. Victoria leads the way with a 2.2% growth in the last year that will see Melbourne’s population reach 7.7million by 2051. This is an additional 100,000 home needed every year in Melbourne alone. Queensland and NSW follow suit in second and third place increasing in population by respective 1.7% and 1.5%.

Also, Australia is still perceived as a safe economic and political heaven by investors around the globe. So perhaps we should have a little more faith in the Aussie market, because while a collapse in our property market is possible, it does seem very unlikely.