6 Reasons Why The Recession Isn't Bringing Down House Prices
While the recession lays on Australia’s doorstep, house prices in all capital cities (bar Darwin) are higher than they were a year ago.
This can be attributed to the following reasons;
1. Banks are offering alternative support, with the ability to offer six month mortgage payment freezes to support struggling home owners. While the loan holiday period expires this month, those who still can’t pay their mortgage will be given an extension.
2. Unemployment rates are at a record high since 1988. With 7.5% unemployment rate, and youth unemployment reaching 16.4%, younger people in the travel, hospitality and education industry have been hit the hardest. This rise in unemployment in younger people has consequentially hit the rental market very quickly – with rental listings increasing dramatically on realestate.com.au and therefore, a decrease in rental rates.
3. Risk is highly concentrated in certain suburbs, 10 of which now account for half of all increases in rental listings across Australia. With the drop of students, there has been a substantial increase in suburbs neighbouring universities, and there are also huge increases in apartments for sale in high-development areas, which at the same time, are seeing big increases in rental listings.
4. While there are struggles in almost every industry across the nation, there are some parts of the economy that are in a boost. These include the mining sector in Western Australia and Queensland, and employment in the federal government in Canberra. This growth in certain economic sectors means that the housing prices within the areas are also growing.
5. Households are currently saving close to 20% of their disposable income, compared to 6% in the first quarter of 2020. Safer conditions among well-paid employment sectors determines their ability to purchase housing properties.
6. Government stimulus packages are also keeping housing prices afloat. Policies like the 5% home loan deposit scheme, state government first home buyer incentives and the recent HomeBuilder grants are ensuring a steady flow of demand into housing.
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