Australian Housing Market Price Downturn: Benefits, Effects, And Overall Implication

Facebook Twitter LinkedIn Mail Us

This current issue is a cause of concern. This year’s downturn happens to be the largest on record in Australia, with periods in the late 1800s and a portion of the 20th century surpassing it.

This is perceived differently by varying sectors. Some see this as good and beneficial in reference to their own profit or purchasing gains. However, others see this situation as alarming overall.

Such a “phenomenon” must be explored closely to see how it affects the general public. Also, it is important to understand why the following contribute to the issue:

  • Overall household spending and wealth,
  • Homeowners selling their current property for an upgrade,
  • Business who desire to enter the property market,
  • Wage

Australian housing market downturn and household wealth

Household spending and consumption is significantly impacted by the Australian housing market price downturn. According to ID, The Population Experts, Sydney and, Melbourne are most likely to feel the effects. This is so because these cities are areas with high reliance on discretionary spending.

As such, wages and salaries play an important role. If wages remain dynamic and adjust to current inflation and other economic drivers, people have more means to spend. However, if wages remain flat, there is definitely a negative effect on household consumption.

When people have the capacity to buy daily items for survival, it presents higher purchasing power. Ideally, this more likely translates to being more empowered to venture into bigger investments such as real estate.

Downturn to benefit a few, but for the short term

With more purchasing power means prices (including housing) become more dynamic. However, with housing prices falling to 9.7 percent in Sydney and 8.3 percent in Melbourne, it only looks promising to some. Homeowners who have decided to sell their current property for an upgrade is more likely to benefit from the downturn, according to Financial Review.

Related:  Labor plans crackdown on dirty money laundered via real estate in Australia

Basically, those who are into selling off their current property are more accepting of terms and rates as dictated by the current Australian housing market. Most likely, their main goal is to get profit from the sale to finance the new home they want to acquire. It is important to understand, though, that not many are adventurous enough to upgrade given the current economic condition.

Overall implication

There is a ray of light in this situation. Many relate the recent Australian housing market price downturn to the recent election. As many prefer to start investing after the elections, the market was at a standstill. It then eventually went lower than expected because of investment inactivity.

Now that the election is over, housing prices are becoming more stable. With property reforms to be implemented, housing prices are gaining momentum. However, complete overhaul and improvement are definitely not expected to happen overnight.

As aforementioned, several factors contribute to the improvement of Australian housing market prices. Government platforms should not only concentrate on property-related initiatives. It must also consider stability in wages to provide every individual with more purchasing power.

Disclaimer

Certainly, this article discusses the most recent housing issue that Australia is facing. It needs to be discussed and reviewed to eventually stabilize the Australian housing market price.

If you like this post, Australian Housing Market Price Downturn: Benefits, Effects, And Overall Implicationsubscribe to our newsletter and stay in touch with us by liking our main Chan & Naylor Facebook page, the Chan & Naylor North Sydney Facebook page,  as well as our LinkedinInstagram, and Twitter pages.

Related:  Housing Market Update - March 2016

The Chan & Naylor Group has national offices in South West SydneySydneyPymble and Parramattain New South Wales, MelbourneMoonee Ponds and Hawthorn in Victoria, Brisbane and Capalaba in Queensland, and East Perth in Western Australia that will gladly provide you with reliable investment advice. Contact us today.

Leave a Reply

Your email address will not be published. Required fields are marked *

Join our mailing list today!

Keep up to date with our latest news & updates!