In 2010, Australia experienced one of the strongest housing markets in the world during 2010, new research shows.  However, in 2011 it is not certain that this trend will continue.  It is likely that rising interest rates will retard the rapid growth in the market according to the Global Real Estate Trends report.  Home prices increased in Australia, Canada, France, Sweden, Switzerland and the United Kingdom over the time that the research was being conducted.  They remained flat in Germany and the United States, and fell in Ireland, Italy, Japan and Spain.

Australia led the pack in house price growth, thanks to relatively-low unemployment and tight housing supply.  However, interest rate hikes and a cut to the first homeowners grant slowed a “red-hot” property market in 2010 to some degree, the report said.  It is predicted that the RBA will raise interest rates by an additional 75 basis points in 2011 which will add to this slowing effect.  The dark horse of the global property market was the United States, where there was a surprise result and the housing market stabilised.  The United States has much lower interest rates than Australia.  That trend is expected to continue, with the report predicting the US Federal Reserve to maintain its record-low 0.25 per cent rate through the end of 2011.

This means that property transactions will be likely to be seeing continued growth, especially in the big cities in Australia where property price growth has simply been a fact of life for more than two decades now.  The asset inflation in property and the unaffordability of housing is one of the most difficult problems, but also on of the greatest sources of wealth in the Australian housing market.  Conveyancers are not predicting any reduction in the number of transactions either with the the relative liquity of the property markets expected to remain at their present levels.