According to the latest figures that were released by the Australian Bureau of Statistics, the unemployment rate has risen as high as 5.7%, the greatest rise in almost two decades. Sadly, over the next couple of years, the unemployment rate is likely to continue to rise. Naturally, investors are concerned as to what will happen to the property market as a result. In fact, the majority of investors in the Australian real estate market list the rise in unemployment as their most immediate concern.
Good News, Bad News
There is good news, and there is bad news. The bad news is that the rise in unemployment will affect the property market in different areas, in different ways. The good news is that it is not likely to affect the market quite as much as you may fear.
Keep in mind that the current unemployment rate in Australia is tapering off from historic lows. Eight years ago, at the beginning of the boom in the property market in Australia, the rate of unemployment peaked at more than 7%. Just three years ago, the rate of unemployment was at five percent, which the majority of economists consider full employment.
Consider Everything
There are several points that must be considered in order to fully understand how the real estate market in Australia is affected by unemployment. First of all is to explore the statistics, such as the rate of participation. You must also take into consideration that the level of employment for women has risen significantly over the past few months as more and more families prepare for hard times.
As we look back at the last three downturns, the rising unemployment rate had no obvious impact on property prices. The property market in urban areas may see a rise in unemployment as high as 10% before a negative impact surfaces.
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Tags: Australian property market, Property Investment, Property Market, Property Options, Real Estate, real estate market, unemployment
{ 2 comments… read them below or add one }
Hi Sean,
Wouldn’t rising unemployment figures mean that you may be able to pick up some good bargains in the near future? If people need to downsize because they can’t afford their mortgage any longer?
I guess it’s a matter of watching the real estate market closely to see what happens in your area.
Although I have very limited knowledge in this area, I can see how unemployment can affect the real estate market. I am sure the loaning institutions would have a plan b, like a bit of grace, before foreclosing on a large number of people. The unemployment rate will be something to keep an eye on though.