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Unemployment may hurt property market

The growing rate of unemployment may affect consumer sentiment to the detriment of the housing market, Multifocus CEO Philippe Brach told Smart Property Investment.

“The big factor to me that will affect Australia is ri

Growing unemployment levels may injure the housing marketses in the unemployment rate.”

The unemployment rate recently rose to its highest level in six months, to 5.2 per cent, a drop of 15,400 jobs.

However, he explained, until unemployment reaches eight or nine per cent the fundamentals for investing are still solid.

“But there is still that psychological effect that is not to be under estimated,” he said.

HSBC economist Paul Bloxham said while the result wasn’t horrible, it obviously wasn’t great.

“The employment statistics show that growth is currently below trend, much as yesterday's GDP numbers also showed,” he said.

“This should leave the door open for a further RBA rate cut. As such, we still expect one more 25 basis point cut in the second quarter.”

Investors may, however, benefit from the data that shows Western Australia has the lowest unemployment rate nationally at 4.1 per cent.

Yesterday’s decision for a multi-million dollar contract to be awarded to an engineering company is indicative of the opportunities for investment, Commerce Minister Simon O’Brien said.

“This contract will result in more than 500 jobs and outcomes like this are why WA has Australia’s lowest unemployment rate,” Mr O’Brien said.

These decisions are based on a 10-point plan announced last July.

Investors may also want to watch the Northern Territory, with the third lowest unemployment rate at 4.3 per cent, according to state treasurer Delia Lawrie.

“Against a background of depressed global conditions and flat national consumption, our economy continues to perform, keeping Territorians in jobs with resident employment in the Territory increasing by 1.4 per cent in the past year, driven by a 2.9 per cent increase in full time employment,” Ms Lawrie said.

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“With major projects now commencing, signs point to private investment surging back, with State Final Demand (SFD) increasing 5.9 per cent in the last quarter against just 0.2 per cent nationally.”

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