Australia’s Property Downturn and its Effects on the Long Term
Australia's 7.6 trillion property market is on a sort of downturn as home prices have started to dip in four out of five council areas. According to ABC AU, the slump is currently in its second year. Prospects have largely remained dim, and policies haven't been helping the situation get better.
With no resolution in sight, it appears that the property market is in a position to drag down the rest of the economy with it. Australia is also one of the markets which analysts see is particularly in danger of being affected by the global property market cool down. When mixed with these concerns, it's hard to see where Australia is going to look for the means to pull itself out of this situation, as it's enjoyed 27 unbroken years of unparalleled economic development.
Analysts like UBS chief economist George Tharenou has a bleak outlook for the economy. In his opinion, Australia isn't doing good facing what appears to be a historic downturn in housing. It also appears that it's possible housing prices won't get better this year, with the earliest hint at leveling out in 2020.
Many forecasters haven't been able to predict this nor the severity of the downturn. Most in the market, however, isn't facing any doubts that it would be one of the longest, as well as the biggest, in a period of 10 years or more. When it ends, according to Sydney Morning Herald, it won't even end up in the highs, only managing to break even.
Another analyst, Paul Bloxham, HSBC's chief Australia and New Zealand economist, has it looking bleak for the economy. He said that the property market is going to have a "hard landing" isn't too far from the question.
There were various factors influencing the market right now. However, he was convinced that the market, as it tries to correct itself, might end up crashing. Factors from the international markets as well as local events have the potential to gang up and make things harder for the Australian property market.
A good example of the country's declining fortunes is Sydney and Melbourne, wherein 60 percent of Australia's property transactions have taken place. The downturn in both places have gone differently; Sydney's downturn has, so far, been "sharper and widespread." In contrast, Melbourne's downturn has yet to be the worst it's been, but so far, the effects have been felt.