Housing shortage helps protect prices
Although house prices have fallen in certain parts of Australia, the chances of the country suffering a property market collapse are low.
The bottom has fallen out of the housing industry in a lot of countries around the world and homeowners have found it impossible to sell their property – especially if they want to avoid making a loss.
However, Australia is slightly different, however, because there is no major oversupply of houses.
Market collapses generally occur when there are too many spare dwellings on the market and not enough home loan customers to buy them.
Matthew Hassan – senior economist at Westpac Banking Corp – told Bloomberg that building approvals in Australia have been low for a number of years, which has limited the number of new abodes coming on to the market.
"Without the accumulated severe shortage of stock, there wouldn’t be the substantial latent demand for dwellings that has been a strong support for prices," he told the news provider.
Have a question about home loans? Ask the money gurus at Mozo Answers.