Real Estate Boom

Billy · 09-11-2006, 05:41

What do you think of the interest rate rise, real estate prices etc?

Quote:

HOME buyers and renters are in danger of being locked out of Australia's property market with another interest rate rise set to jeopardise housing affordability and send rents higher.
The Reserve Bank of Australia (RBA) today jacked-up official interest rates by a quarter of a percentage point to 6.25 per cent, its third rise this year following an increase of 25 basis points in May and another by the same amount in August.

It was also the eighth increase in the current interest rate cycle that began just over four years ago.

Property agents Raine and Horne's chief executive Angus Raine warned that the latest hike could have social implications, dividing the country between the `haves' and the 'have nots'.

And with renters and homebuyers accounting for about 65 per cent of the population, the impact would likely be wide spread.

"This hits hard at all mortgage holders, but it comes at a time of an emerging rental crisis, and higher rates will leave many of those saving to buy a home firmly on the rental treadmill," he said.

"We could be heading towards a socially disastrous situation where millions of marginalised families are permanently locked out of the property market."

Real Estate Institute of Australia (REIA) president Tony Brasier said the rise would prevent first home buyers from entering the market.

"First home buyers and young people in particular are going to be thinking long and hard before buying," he said.

REIA said the three rate rises this year have added a total of $113 per month to the minimum monthly repayment on a $230,000 mortgage, and increased interest payments over the life of the loan by $33,000. The REIA said borrowing $230,000 now means paying back around $530,000.

Housing Industry Association (HIA) executive director of housing and economics, Simon Tennent, said that while there was no denying the inflationary risks to the economy, the RBA's decision would hurt the country's two-speed economy.

"The economic divide between the resource rich states and the rest of Australia has never been wider," Mr Tennent said.

"Sadly, while the latest increase may cool the hyper inflated West, it will add further to the pain being felt among homeowners and renters in other states."

But, while many in the housing market face a tough road ahead, property investors are set to gain from the latest RBA tightening.

Managing director of property research firm Braxton Chase, Andrew Donnelly, said those looking for an investment property were shopping around in a buyer's market with bargains abound.

"A 25 basis point increase in interest rates will have only a minor effect on investor returns, and in most cases any increase will be significantly outweighed by the capital gain that can be made from buying at a major discount," he said.

On top of that, lower vacancy rates are boosting competition for rental properties and consequently investors' returns.

"This is very attractive to seasoned investors who can look forward to a period of solid capital appreciation as the cycle moves into its growth phase," Mr Donnelly said

BeautUtes

Dazza_XL · 09-11-2006, 06:55

It will turn around.
It's like most other things, what comes up, must come down. And when it does, I will purchase.
Until then, I am happy to rent.
I already have a good solid deposit locked away in managed funds earning 20% P.A, so that will help a fair bit when the time comes.

Cheers

Darran

TanUteGirl · 09-11-2006, 08:09

I'm about to put my house on the market as it's 150kms from where I work, nothing holding me in Melbourne anymore. I've had it 5 years and I certainly won't be making one of those huge real estate profits, which is sad. It's become a liability to me and short of buying 100's of acres somewhere in the future I'm not in a hurry to own anything again.

When I first bought it my mortgage was half of what local rent figures were, now I'm better off renting. Gunna put what I make into a high interest saving account, spend a bit on the ute, see some of Australia and try working in the NT for a while. And I'll bloody well enjoy it too.

The great Australian dream ain't all it's cracked up to be.

doc · 09-11-2006, 09:04

I am fed up with renting, however while rates are high it gives me a good chance to save my bikkies to buy a house when the prices come down a little again.

BeautUtes

Panas · 09-11-2006, 09:09

Quote:

Originally Posted by Darran

It's like most other things, what comes up, must come down. And when it does, I will purchase.
Until then, I am happy to rent.
Darran

Mate I don't quite agree with your statement there. Although prices will slow down and possibly stop for a while (eventually) they will not drop significantly. Currently house prices in Perth are increasing at a rate of approx $10,000.00 per month and have done so for the last 18 months. I think the only thing you can gaurentee is that you will pay more for property tomorrow thqan you will today regardless of intrest rate rises. I have been in your position and it cost me heaps.

Dazza_XL · 09-11-2006, 09:10

Rates are not high.
This is the lowest they have been for a long while.
Everyone is going on about Interest Rates rising, and home owners not being able to afford the repayments now because of the rise... They've obviously overcommitted themselves, and maybe shouldn't have spent so big to start with.
There is only one way the rates will go, and thats up!

Cheers

Darran

Panas · 09-11-2006, 09:15

I could not agree more Darran. If people have streched themselves so far that a couple of small rate increse's will cause them to sell up then it is their own fault.

Dazza_XL · 09-11-2006, 09:18

Quote:

Originally Posted by Panas

Mate I don't quite agree with your statement there. Although prices will slow down and possibly stop for a while (eventually) they will not drop significantly. Currently house prices in Perth are increasing at a rate of approx $10,000.00 per month and have done so for the last 18 months. I think the only thing you can gaurentee is that you will pay more for property tomorrow thqan you will today regardless of intrest rate rises. I have been in your position and it cost me heaps.

Just because its happening in Perth, does not mean its happening everywhere else.
I believe the mining boom has a lot to do with the housing market going thru the roof, over here at least.
It is only a matter of time before that boom comes to an end, and when it does, house prices should follow.
I also believe that over this way, small towns are becoming far too dependant on the mining industry. I have seen first hand what happens to a town once a big mine shuts, and its far from good.

Cheers

Darran

BeautUtes

Carrots · 09-11-2006, 09:18

Quote:

Originally Posted by Darran

Rates are not high.
This is the lowest they have been for a long while.
Everyone is going on about Interest Rates rising, and home owners not being able to afford the repayments now because of the rise... They've obviously overcommitted themselves, and maybe shouldn't have spent so big to start with.
There is only one way the rates will go, and thats up!

Cheers

Darran

That is it mate. We see it now and then here at work with some clients but not often as most of our client base is small to large business so not a great deal of individual employed people so to speak.

As the old saying goes - Rent Money Is Dead. And it is. It may for some cost more weekly to pay off a mortgage, but in the long run you win out. You end up with an $X00, 000 or whatever it may be asset that can then allow you to further expand and buy another etc. The "great Australian dream" is not that hard to obtain, just a matter of being wise about ones spending and as Darran said - don't over commit, theres been numerous comments made about that in recent times, banks and lenders being all too happy to provide far too much for what most people can justify to pay back and thus they end up in a financial hole!

Although can't say I can forsee the real estate market taking a big dive price wise - in trusn of the number of people buying and selling it is likely to stall eventually and possibly go backwards from where it is now, but $$$ wise its not likely to drop much. What may happen is prices may fall back slightly to where they should be as opposed to the over inflated prices we see currently.

Carrots · 09-11-2006, 09:19

The other thing we must remember - is going back 20-30 years ago an interest rate of 6.25% would have been heaven on earth!

09-11-2006, 06:55	#2 (permalink)
Dazza_XL Status: Admin/Moderator Join Date: Jul 2005 Location: Queensland. The Sunshine State. Posts: 2,575 Rep Power: 10	Re: Real Estate Boom *It will turn around.* *It's like most other things, what comes up, must come down. And when it does, I will purchase.* *Until then, I am happy to rent.* *I already have a good solid deposit locked away in managed funds earning 20% P.A, so that will help a fair bit when the time comes.* *Cheers* *Darran*

09-11-2006, 08:09	#3 (permalink)
TanUteGirl Status: November 2006 Best Chicks Ute Join Date: Aug 2006 Location: Darwin Posts: 578 Rep Power: 3	Re: Real Estate Boom I'm about to put my house on the market as it's 150kms from where I work, nothing holding me in Melbourne anymore. I've had it 5 years and I certainly won't be making one of those huge real estate profits, which is sad. It's become a liability to me and short of buying 100's of acres somewhere in the future I'm not in a hurry to own anything again. When I first bought it my mortgage was half of what local rent figures were, now I'm better off renting. Gunna put what I make into a high interest saving account, spend a bit on the ute, see some of Australia and try working in the NT for a while. And I'll bloody well enjoy it too. The great Australian dream ain't all it's cracked up to be. __________________ AS SILLY AS A BUM FULL OF SMARTIES

09-11-2006, 09:04	#4 (permalink)
doc Status: May 2006 Best Chicks Ute! Join Date: Feb 2005 Location: - Posts: 2,423 Rep Power: 22	Re: Real Estate Boom I am fed up with renting, however while rates are high it gives me a good chance to save my bikkies to buy a house when the prices come down a little again. __________________ Psycho but Sweet... Evens things out

09-11-2006, 09:10	#6 (permalink)
Dazza_XL Status: Admin/Moderator Join Date: Jul 2005 Location: Queensland. The Sunshine State. Posts: 2,575 Rep Power: 10	Re: Real Estate Boom *Rates are not high.* *This is the lowest they have been for a long while.* Everyone is going on about Interest Rates rising, and home owners not being able to afford the repayments now because of the rise... They've obviously overcommitted themselves, and maybe shouldn't have spent so big to start with. *There is only one way the rates will go, and thats up!* *Cheers* *Darran*

09-11-2006, 09:15	#7 (permalink)
Panas Status: September 2006 Best One Tonner Ute Join Date: Mar 2006 Location: Carramar Posts: 107 Rep Power: 3	Re: Real Estate Boom I could not agree more Darran. If people have streched themselves so far that a couple of small rate increse's will cause them to sell up then it is their own fault. __________________ "He who only sees the obvious, wins his battles with difficulty; he who looks below the surface of things, wins with ease. -- Sun Tzu" www.nationalremovals.com.au

09-11-2006, 09:19	#10 (permalink)
Carrots Status: Try Me! Join Date: Sep 2004 Location: SA Posts: 1,255 Rep Power: 10	Re: Real Estate Boom The other thing we must remember - is going back 20-30 years ago an interest rate of 6.25% would have been heaven on earth! __________________ *"Road Hammer"*