From: Samuel Riley

Hi everyone just a question I was pondering..

What effect(s) does rising unemployment have on property?

I was thinking for one that demand may slip as not as many people will have the capacity or the means to borrow for a house/unit, this in turn would effect the growth in a negative way..

also some people may be forced to sell as they cant meet their loan repayments..

any others?

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Reply: 1
From: Owen .

Tenants may be more inclined to stay put rather than moving for the sake of it or having the ability to buy.

This applies to "normal" rentals rather than high end executive rentals. I think the high end stuff will suffer as the big dollar earners also loose their jobs through cutbacks. Re-renting these properties may prove very hard. This has always proved to be the case in downturn/recession times - luxuries are the first to go.
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Reply: 2
From: GoAnna !

Last time there was high unemployment in Victoria I noticed an increased pressure on rents. From what I understood (and I did not research it very far) a number of investors sold their properties as they were too expensive to hold hence decreasing the rental stocks available and some homeowners lost their homes when interest rates went high and were forced back into the rental market. Difficult times often cause an increase in marriage breakups and therefore an increased need for housing.

However these are different times with interest rates low and unemployment nowhere near the levels of the early 90s.

GoAnna !
(aka Anna before she got real)
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Reply: 2.1
From: Steve Van emmerik

My experience is also that the top end of the market can suffer first and most and also you can have problems with tenants if they loose their jobs. i.e. they can't pay and this cause you hassles.

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