What’s stoking Australian housing crisis and how can it be mitigated? - Kalkine Media

July 20, 2022 01:45 PM AEST | By Toshiva Jain
Follow us on Google News:

Highlights 

  • Rising interest rates could have a severe impact on the Australian property market.
  • Studies have observed that young investors are more affected by the tremendous rise in interest rates.
  • The federal and state authorities are considering initiatives to tackle the housing crisis.

Australia is experiencing an acute housing crisis, with many expecting the market to crash soon. However, it is not a matter of surprise. With the cost of living going through the roof in response to consecutive interest rate hikes, it was very much expected that the housing market may crash in the coming weeks.

The rise in interest rates has dealt a major blow to the property space. Over the last couple of months, the Reserve Bank of Australia (RBA) has raised interest rates thrice from the record low of 0.1% to a staggering 1.35%. The hikes are aimed at allowing the economy to recover from the impacts of the COVID-19 pandemic, Russia-Ukraine war, energy crisis and recent floods in the country.

With the rising interest rates and household expenses, it is getting tougher for Aussies to make their mortgage repayments. As a result, many people are contemplating to sell their properties. However, experts suggest that selling properties is not an optimum choice right now. Rather, this is the time when people should reassess their investments.

Various surveys have highlighted young investors as the most affected by the tremendous rise in interest rates, while older investors as more prepared for the situation.

What is the government doing to address challenges?

Recently, the federal and state authorities held discussions to address the housing challenges.

The newly elected Australian federal government has vowed to address the concerns in order to lower homelessness and improve the housing conditions. The party intends to bring in initiatives to help improve housing affordability in the country. Additionally, according to the federal government, regional first home buyers will be provided support to purchase their first homes.

One of the many plans is a Housing Australia future fund valued at AU$10 billion. In the initial five-year period, the fund would aid the construction of 30,000 affordable and social housing properties.

Bottom line

There is a significant potential for the housing market to experience a crash soon amidst rising interest rates and skyrocketing living expenses. Any further increases in interest rates could add fuel to the situation.

However, property investors can save themselves from massive losses with proper planning and right decisions. Additionally, initiatives from state and federal authorities, which aim to launch more viable schemes for home buyers in the country, are expected to address the concerns.


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.



Top ASX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK