Drought and economic uncertainty has seen the RBA hold off on raising interest rates.
Will this sustain the boom? Will it lead to an even bigger bust?
What are your thoughts?
Property Investing .Com Admin
http://www.PropertyInvesting.ComGood morning…
Australia has never experienced a property bust before… only corrections of about 20% max.
I can”t see a bust this time around unless we have a huge x-factor not currently forseen, such as a huge stockmarket correction, major multi-country war, mass unemployment etc.
But surely prices can’t keep rising, ’cause sooner or later property just won’t be affordable to the masses.
At this point the market will have peaked and prices will start to fall.
Well, that’s my take on things anyway!.
Steam_Train
P.s. When are you going to run a seminar in the West? Do like the song says! “Go West! Life is peaceful there!”
Dear Admin (Brent / Steve),
I was anticipating the RBA raising interest rates by 50 basis points, however, not to be. While the drought has had a major impact on rural economies where cash is still king, there’s not as much of this around at the moment. Rural towns are feeling the pinch & the more affected the area, the less spending.
How does this impact on housing & the economy?
As I live in a (semi) rural Vic town, we’re starting to see this impacting on the overall economy now. Industries supporting the rural sector are reporting a massive downturn in sales. Cascading thru, this also means potential for increased unemployement. In economic terms, this is good for the government ’cause high unemployement means lower inflation rates. This further consolidates the RBA’s decision to maintain low interest rates & everyone’s happy. Except investors….While the FHOG is a good thing, when combined with the (almost) lowest interest rates in 40 years (earlier this month the US Fed Res dropped interst rates for the 12th time in under 2 years to 1.25%), it’s amounted to excessive numbers of potential new home buyers. My financial advisor (sic) showed me some data around 6 months ago indicating that the rental payments in most areas will take approx 12-18 months to cach up to P&I loan repayments. This has increased the gap between rent & (neg gearing) investors loan repayments. People are basically paying too much for property ’cause the market is demanding too much, cause it’s overheated & the stockmarket’s not really a great option for speculative investors…
As earlier stated, I’d have liked interest rates to have gone up (by as much as 2% would have been ideal). This would have corrected the market in a HUGE & RAPID way. People with excessive disposable cash & credit card bills may be forced to sell as the repayments are now out of their ability to repay. More houses, less people, less demand, oversupply of units around Melb = a great time to buy…
Regarding wraps, I’d be anticipating an increased demand in both property services & people seeking low cost housing. Tenent risk levels may correpsondingly increase.
My 2c’s worth….
Michael [
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