Despite property prices falling and the threat of recession, Australians are more interested in property than shares in 2009.
A survey by Loan Market Group found fourty per cent of respondents thought buying property this year was a higher priority than investing in shares. This is compared to 6 per cent of those surveyed who said they would invest in shares, following the Australian All Ordinaries index falling 43 per cent in 2008. Eight per cent said they planned to "weather" the financial downturn in 2009, while 2 per cent of respondents said donating to charity was their priority.
Lower interest rates, falling property prices and increases to the First Home Owners Grant are all encourging consumers to consider the property market for their next investment, said Loan Market Group executive director, John Kolenda.
"It's (the cash rate) expected to go lower, and that is obviously encouraging to prospective property buyers,'' Mr Kolenda said.
"The increase in the first home owners grant to $14,000 and to $21,000 for buying or building a new home will expire on June 30 this year.
"That is also likely to have a significant impact on the property market.''
In December, the government issued one off cash handouts to eligible families, and this together with lower rates and lower petrol prices means that many households are looking for ways to spend the extra funds wisely.
Since September, the Reserve Bank of Australia (RBA) has slashed the cash rate by three percentage points to a seven-year low 4.25 per cent. It is predicted that the cash rate will fall a further 125 basis points to 3% by mid-2009.
Housing markets are showing signs of struggle, with reports this week showing that new home sales fell 1.1% in November, and building approvals also fell. Those in the industry are hoping that the combination of lower rates and falling property prices will lure buyers back to the property market this year.
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