World Recession and its impact on housing prices

According to economist discussions in many fora, recession is on the horizon. Well,let’s take an in-depth look at what’s occurred recently and in the past, so we can put your mind at ease about the word recession and its impact on housing prices. The official cash rate sits at 1 per cent. The Australian dollar fell to 0.67% US and unemployment rate remains at 5.2 percentile.

This outcome is linked to the trade wars occurring between China and the U.S. and also post-GFC growth waning. The U.S. has been in recession previously in 2000 and 2008. Many economists will argue that in both cases, Australia managed to dodge any repercussions. Other economists highlight that Australia had more resilience back then. 

This is provided that the credit squeeze subsides and the industry meets rather than exceeds demand. 

Australia’s last recession and recession housing prices

The last time Australia experienced a recession was in the 1990s. At the same time, recession housing prices were flat and prices were dropping in some areas. However, not all markets weakened during the 1900s recession. Melbourne recorded price drops of over 6%, but Queensland stayed steady. 

This is similar to what occurred in the latest housing market decline where Sydney and Melbourne’s prices plummeted and Tasmanian properties defied the downturn. Therefore, the way that the housing market will respond to a recession will depend on the type of recession. For instance, if it is financial, then recession housing prices in Sydney and Melbourne are likely to be hit the hardest.However, if the recession is resource-related, then Western Australia is the most likely to suffer. 

Historical housing price changes during economic downturn

Some markets showed little or no signs of change during an economic downturn due to the ability of their state, city or town economy to keep them buoyant. But historical data also shows that all Australian states and territories have experienced recession multiple times since the mid-80s. For example, Sydney faced nine months of declining gross domestic product during the 2012-13 financial year. During the 1990s recession, the national GDP dropped by 1.7%, and unemployment in Australia rose from 7.4% to 10.1%. 

In comparison, the Australian GDP rose by 2% and unemployment hovered around 5.2% during the first quarter of 2019. However many larger companies such as Big W are closing stores that are not performing and this could increase Australian unemployment levels. With the 1990s recession came housing price declines in some capitals, while other capitals realized growth. Sydney and Melbourne’s home values declined by 7% and 2.3% respectively, whereas Brisbane property prices increased by 6.8% and Hobart dwelling values rose 4.3%. 
Source: eChoice


Leave a Reply

Your email address will not be published. Required fields are marked *

RSS C J Investiment

  • Greatest Depreciation Impact on buying brand new property versus second hand property. September 17, 2019
    The recent depreciation changes have the greatest impact on the types of property you may choose to invest in. Some people prefer to invest in brand-new properties, while others opt for older property that they can renovate and resell for profit. Washington Brown, who are the property depression experts and accredited surveyors in Australia and internationally do […]
  • How to Use Leverage to Build Your Business Effectively September 7, 2019
    Leverage is simply doing more with less. When we mentioned leverage in this context, money is what people think of most often.  Loans, mortgages, other people’s money – all are forms of leverage based on money. While this type of leverage is important, it is equally important to use other forms of leverage in your business strategy.  Your Wealth Team Systems […]
  • Some incredible deals available for people who can refinance September 4, 2019
    The market is changing fast. Banks are again showing an appetite for interest-only loans again. And many lenders have reduced their assessment rates by up to 2.0%, which represents an increase of approximately 12-15% in your borrowing capacity. There are some incredible deals available for people who can refinance.  Secure a complimentary loan review with our JV partner, EK […]
  • World Recession and its impact on housing prices September 3, 2019
    According to economist discussions in many fora, recession is on the horizon. Well,let’s take an in-depth look at what’s occurred recently and in the past, so we can put your mind at ease about the word recession and its impact on housing prices. The official cash rate sits at 1 per cent. The Australian dollar fell to 0.67% […]
  • How I started Real Estate Business September 2, 2019
    Many people ask me why I started real estate entrepreneurship instead of sticking to my Nursing Profession. I tell them that as much as I enjoy my Nursing Career, the one disadvantage of it is that I trade my time with a dollar. That is if you don’t wake up to go and work, then […]
  • How to Sign a Rental Lease Agreement With Your Tenants September 2, 2019
    In order to sign a rental lease with your tenants, you will need to have – of course – a rental lease. You can get a state-specific lease agreement from a number of sources, such as Government Agencies or your attorney. Each Region has different rules and laws that govern the landlord-tenant policies in that state, so chances are a […]
  • How to Rent Your House to the Best Tenants September 2, 2019
    The most important decision you make that will determining the success or failure of your rental is the person you put in. A bad tenant can potentially cause years of stress, headache, and financial loss – while a great tenant can provide years of security, peace, and tranquility. Don’t underestimate the important of renting to only the best tenants.You are reading […]
  • Money Management Strategies for People In Diaspora August 31, 2019
    Here are some ways workers living overseas can manage and protect their money for better long-term financial health. Open a local bank account A local bank account can help you save money on extensive ATM fees. It’s also a good thing to have for making deposits each time you get paid. When you use a foreign card […]
  • The Single Most Important Step You Will Take If You Want To Have A Successful Website August 31, 2019
    Everyone is looking for a short-cut to online riches and yet over 99% of those people NEVER use the informational products and money-making tools that they’ve purchased. We get too busy, or too lazy, or we simply procrastinate so long that we forget what we were intending to do in the first place. While there are a lot of […]
  • Double Your Productivity August 26, 2019
    If you read one article before starting your week, read this one. Set aside a few minutes and focus. I am going to share some habits that I’ve implemented myself that have resulted in massively increased productivity for me! I learned this strategy from my business partner,the creator of Rehab Valuator,Daniil Klyman. This article will […]

Google Translator

Recent Posts

Our Agents

Charles Vincent Kaluwasha

President and Founder

President & COO, C J Investiment LLC. Charles Kaluwasha has been a part-time entrepreneur and investor since 2008. He currently…