Has the Property Market in Australia Peaked and Why It Won’t Crash

There has been a lot of discussion recently concerning the fact that the Australian property market had boom years followed by the current slump, and whether or not it will eventually crash or continue to look bright for investors.  In the following article we will look at some reasons suggested by a property expert as to why the property market won’t crash.

Immigration Fuelling Population Growth and Natural Population Growth

Despite the fact that immigration levels have dropped over the last few years, the population in Australia is continuing to grow at a faster and steadier rate than any other country of the developed world.

Healthy Economy

Australia’s healthy economy looks set to continue performing at the same level it has for the past few years.  A level, it should be noted, that is the envy of most countries in the West and one that will create jobs for anyone who wants and needs one.

A Sound Banking System

The Australian banking system currently has a very low default rate, tight and sensibly strict lending practices and very reasonable interest rates which all work to ensure that the property market will remain prosperous.

Shortage of Properties

In some areas of Australia, there is a real shortage of properties, which works in favour of keeping the housing market afloat as it means rent charges will increase.

Difficulties Financing New Developments

Due to the increasingly high costs of construction work and it becoming more and more difficult to secure new property developments; it means that new developments will be more expensive and emphasise the value of already existing and established homes and property.

Healthy Household Debt Level

All in all, Australians on the whole are borrowing more money than in the past.  However, the debt generated is more often than not, in the hands of those who can actually afford it.  Australians are saving more, paying off their mortgages faster and taking on less additional debt in the form of credit cards which is improving the state of everyone’s financial situations.  This means that the risk of house prices collapsing in the event of the economy taking a downturn or interest rates rising is reduced.

Home Ownership Culture

A large number of people, 70% to be more exact, either own their own homes or are currently paying off mortgages on their own property.  Australians tend to have high levels of equity in their property and a very conservative position when it comes to debt.  In fact, around 50% of all Australian homes have little or no debt against them.

What Does This Mean For You?

Although this all sounds good and you may be tempted to leap into buying your own home, you need to give due consideration to your own situation.

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