How The Global Recession Has Affected Australian Property
A global recession has crippled the property markets in many countries around the world
, causing record numbers of repossessions and making it more difficult than ever for people to get approved for home loans. For a number of reasons, however, Australia has largely been shielded from most of these negative effects. What is it about Australia that makes it differ from so much of the world? You can learn more about this phenomenon by reading on below.
Stricter Property Lending Rules:
Compared with many countries, especially the United States - Australia has fairly strict property lending rules. As most buyers agents can attest, getting approved for a mortgage in Australia is no easy feat. At the same time, it is not as if you have to be swimming in cash to buy a home in this country; you simply have to clearly demonstrate your ability to pay for a mortgage.
One of the biggest factors that precipitated the huge housing crisis in countries like the U.S. was lax lending rules. Incredibly, many banks and lending institutions relaxed their requirements for home loans so much that people could, essentially, sign written statements explaining their incomes - without providing any additional documentation. Needless to say, this meant that many sorely under-qualified people were getting approved for mortgages. As more and more people defaulted on their mortgages, the crisis began in earnest. In Australia, these lax lending rules didn't really crop up, so the problem never intensified to the same degree.
Several other factors have helped Australia weather the global recession quite well. They include:
Banks Working with Customers - In Australia, most banks try to work with their customers in order to help them avoid repossessions. Seperate from what has gone on in the USA, where many thousands of people have had their homes foreclosed upon, most Australians are able to stay in theirs. This helps mitigate the effects of the global recession.
Lots of Space - If there's one thing that Australia has in abundance, it's space. One of the precipitating factors of the mortgage crisis in the U.S. was rapid escalations in housing prices. This was brought on by housing shortages, in many cases due to a lack of space. There's plenty of room in Australia, so housing shortages aren't as likely.
Employment - Although unemployment rates have been rising in Australia of late, they've been mitigated a little by labour shortages in the mines. This has been a fantastic help in protecting Australia from the blow, which is a matter of immediate value because when people are unemployed they can't afford to buy property.
Ask any buyers agent, and they'll tell you that the property market in Australia is more complex than this article makes it seem. Many factors go into its success or failure; for the time being, all looks quite well.
Copyright (c) 2010 Nadine Davis
by: Nadine Davis
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