Why Jobs Growth Is Good For Property Investors

There was good news about Australian jobs this week. Economists were predicting unemployment, which was at 5.5%, to increase to 5.6%. It actually fell to 5.3%.

That's an estimated 52,700 more people employed, which the ABS notes "is the largest rise in employment since December 2006."

Low unemployment places upwards pressure on house prices, because with more competition for fewer employees, employers are forced to offer higher salaries. In turn, being paid more allows you to borrow larger amounts, and when you can borrow more money you can afford to pay more for property, and hence there is scope for growth in house prices.

It's not all fun and games though. The RBA will worry about inflation jumping higher as wages increase, which is why lower unemployment adds to the possibility of future interest rate rises