Monday, May 31, 2021

House Prices to Fall? Blame Iron Ore in China

 So you may have heard that the iron ore price in the world is falling but why is this important to those looking for a home in Perth? Since Australia is the biggest player in iron ore right now, when the price of iron ore goes up, so does our Australian Dollar. This is because there is an increase in demand for the AUD as the value of iron ore goes up. When the price goes down, so does the dollar. The drop in the Australian Dollar means that overseas investors Australian assets decrease in value as well. When the outlook is bad for the AUD, it means people will consider the risk of buying a house in Australia. 

The iron ore price has been forced down recently by China demanding that stockpiles of iron ore be used first in China while they source for more iron ore from anywhere other than current thorn in their side, Australia. This decrease in demand has driven the price down and there are warnings that the AUD could be greatly impacted in the coming months. On the contrary, with a drop in AUD, couldn't the interest overseas increase in Australian property? only if they think that the AUD won't drop any further and right now, that's no certainty. 

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