Jobs (c)rush
Predictions of the death of the property market from rising unemployment levels have been greatly exaggerated, according to some experts.
Figures released by the Australian Bureau of Statistics show that the unemployment rate has been increasing this year – the results for May point to a rate of 5.7%.
And the figure is expected to increase even further, with many analysts predicting that the country will emerge from the recession in the short-term but may suffer from the hangover of unemployment for some time.
However Metropole chief executive Michael Yardney said unemployment levels were likely to affect the 35% of Australian households with a mortgage and highly geared property investors.
“Looking back at the past three downturns, rising unemployment did not necessarily cause property prices to fall,” he explained. “In our major urban property markets it seems that unemployment has to rise to above 10% and stay there for some time before it negatively impacts on property values.”
For smaller labour markets or markets based around a single industry however, unemployment rates higher than 7% would impact prices, he warned.
“Regional communities, as well as holiday locations, are likely to be in for a bit of a shock,” Yardney said.
“Some are already beginning to feel the heat, including Adelaide which appears to be struggling with relatively high unemployment figures.”
But while higher unemployment levels inevitably means less money and less ability to purchase homes, the market conditions are perfect for cashed-up investors, Yardney explained.
“Sophisticated property investors see absolutely amazing opportunities out there right now, because the field has been cleared for them,” he added.
“There is much less competition and property holding costs are cheaper. Investors will have the confidence to go out and buy the right type of property – one bought well below its intrinsic value, in an area with a proven record of strong capital growth and a property to which they can add value through renovations or redevelopment.”
