Anything similar to that happening in the US
The US property market collapse is making investors worldwide nervous and Australia is not an exception to it. Actually the Australian Government is taking the US housing crisis very seriously. In August, the foreclosures rose 36% and the housing market index fell. Figures on home building permits reveal a 5.9% drop which is a 12-year low. If dwelling starts falling by the degree that they have in the US, Australia will have wider economic effects. But experts are optimistic about the prospects for the Australian property market, finding the differences far more significant than any perceived similarities between the two markets. In Australia, the construction cycle swings between a low and high level without going ever beyond these levels. Despite huge migration, there was definitely too much activity and now there is strong fallout. The main reason for Australia's mild decline is that the level of underlying demand driven by population growth and overseas migration is supporting dwelling construction in Australia at a much higher level. There were people buying a new house with easily making repayments but when the honeymoon period of the loan begins to roll over then there is a significant increase in the number of defaults. The financial institutions in Australia are very careful; their dealings are crystal clear, which is not the case in US. During the boom period in US, high-risk people were getting debt at a lower cost but only for a short period. After those periods high rates kicked in and it became difficult for borrowers to meet the repayments. There are seen some declines in property prices in parts of Sydney and there has been an increase in the number of evasions. Now we are starting to see an easing in interest rates which is a positive move to reduce the problems to some extent. The main city to experience anything similar to that happening in the US is Sydney.
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