This will completely remove first home buyers from the equation, with disastrous effects cascading up the chain.
What a load of alarmist rubbish! Look at the stats a few posts back that show a CLEAR uptrend in the number of FHBs as a proportion of property purchases - especially in the last quarter, and especially in Sydney. This proportion will be even higher this quarter.
Beej
What I fail to understand; is as to whether or not low interest rates are entirely a good thing for house prices? Granted, it means that the people that manage to hold onto their jobs will be in a far better position, but surely low rates are an indication of the economy?
If unemployment skyrockets, and folk who are losing their jobs simply cannot afford to service their loans ... and are forced to sell, and/or declare bankruptcy (should the sale price be inadequate for mortgage) - surely this will have a hugely detrimental affect on house prices?
You surely must ask yourself why there are forecasts for such low rates ... there must be some truly dire predictions for the Australian economy.
But there was tons less sales - so the number of FHBs didnt increase just the proportion as a percentage !
I suggest you run with the low interest rate thing rather than manipulate other statistics.
What I fail to understand; is as to whether or not low interest rates are entirely a good thing for house prices? Granted, it means that the people that manage to hold onto their jobs will be in a far better position, but surely low rates are an indication of the economy?
If unemployment skyrockets, and folk who are losing their jobs simply cannot afford to service their loans ... and are forced to sell, and/or declare bankruptcy (should the sale price be inadequate for mortgage) - surely this will have a hugely detrimental affect on house prices?
I fail to see how low interest rates can be anything but a positive for house prices. You are assuming that low interest rates will trigger higher unemployment? Granted, that the RBA is lowering interest rates to try and avoid a recession, but I can't see how lowering them causes unemployment to increase?
To my mind, low interest rates will (partially) save real estate from collapsing too much for 2 reasons: firstly, less people will be at risk at default for mortgages. A drop of 8% to 6% would mean a drop of $2000mth to $1500mth repayments- big difference. And of course, it makes it more attractive for potential buyers- especially those renting. I have not noticed my landlord passing on the saving of his mortgage on to me?!
Mind you, rental yields in Australia are still pretty pathetic compared to the UK- where it is not so hard to be positive or neutrally geared. (well, a year ago anyway...)
We are in for a pro property time in the next 5 years as we have never seen before.
No. What I'm suggesting is that since the RBA are most likely going to drop the rates so much - this is reflective of the forecasts for our economy. If unemployment was not to rise, they wouldn't be dropping ratesThe RBA drops rates when they economy is in the toilet, and at the rate they're dropping them ... something is very seriously wrong with Australia, but few know it.
Rentals are yielding like 4 to 5pc at current prices , hardly awesome stuff ....
our good for nothing banks exceed 10 pc .....
Low rates in this economy are a preemptive strike from the govt based on the international hiatus.
You'd rather buy bank shares? I thought the great housing price crash is going to send them all bust????
PS - nothing wrong with locked in, starting, 4-5% rental yields that will only INCREASE over time.
Beej
Thanks Kipp and Passive for some insightful comments. Passive - the point you make about astute buyers researching the market carefully right now is very true. I've tried to hint at this to the guys here before by reminding them that you actually have to get out and about "on the ground" to understand what is actually going on in a particular R/E market, and find opportunities you might be interested in, not just surf the net reading GHPC forums and looking at median house price stats. But it mostly falls on deaf ears!
Cheers,
Beej
What ? You have some special insight? All the real experts - RBA - and more dispute this - all the action is being taken to counter this sort of mindless self fulfilling negativity - papers sell with this sort of bs. Alll the facts show we are not in recession. Have to love this line of reasoning. Leave rates where they are - we will pay because we have high rates
Drop rates - aaahhh a conspiracy must be afoot because rates are dropping. Like a driver trying to avert an accident - do we assume the driver is drunk or using his initiative.
I fail to see how low interest rates can be anything but a positive for house prices. You are assuming that low interest rates will trigger higher unemployment? Granted, that the RBA is lowering interest rates to try and avoid a recession, but I can't see how lowering them causes unemployment to increase?
To my mind, low interest rates will (partially) save real estate from collapsing too much for 2 reasons: firstly, less people will be at risk at default for mortgages. A drop of 8% to 6% would mean a drop of $2000mth to $1500mth repayments- big difference. And of course, it makes it more attractive for potential buyers- especially those renting. I have not noticed my landlord passing on the saving of his mortgage on to me?!
Mind you, rental yields in Australia are still pretty pathetic compared to the UK- where it is not so hard to be positive or neutrally geared. (well, a year ago anyway...)
Nope. Low interest rates would have been a 'preemptive strike' had they been cut 12 months ago.
The RBA were caught with their pants down, and this effort of pulling them up is only going to end up with getting caught in the zipper. It is going to be very painful.
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