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Similar to countries such as the United States, Canada and the United Kingdom, the property market in Australia is struggling to know which way it will turn in 2010. Some experts predict a drop of more than 20% in property values whereas others predict a 5% increase or more.

One of the main determining factors, that will affect the property market, will be employment. If unemployment rates rise, then only people who have a deposit will be able to purchase real estate and newly built houses. Many predict the unemployment will soar to as high as 8% (compared to 2009 which was 4.5%) and this will decide the real estate price tags.

Back in 2008, the Australian Reserve Bank cut interest rates by a massive 3% which helped many people meet their mortgage repayments and the new strict lending rules, issued by the Australian Government has significantly cut down on the amount of mortgages given to people who would struggle to meet their repayments.

These stricter lending rules have also reduced the amount of repossessions on the property market which has enabled the Australian property market to remain relatively stable in the last few years.

A new grant given to first time buyers by the Australian Government has also helped, however, this is only beneficial if the people can keep up with the monthly repayments.

Throughout Australia, debt levels are at an all time high, with more people borrowing from credit cards and banks to keep their heads above water and for people to purchase new properties they will have to take on more debt, which unfortunately they can’t.

Many home owners are having a hard time paying their debts and many have lost their full time jobs and are now working only part time. Part time jobs increased by over 40.000 in 2008, whereas full time jobs dropped by 44.000 in the same period.

Another factor that will affect the property market in Australia is the world economy. Countries such as the USA, Japan and other European nations are suffering a recession and even the big player, China is experiencing a slow down. Every country, all over the world will be affected and Australia, unfortunately, will not be spared.

The property market in Australia, although predicted to be generally weak in 2010, should hold out fairly well in the first 6 months or so, however it will be the employment issues that will be the deciding factor as to where the property market heads in the next few years or so.

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