Badge

I have often discussed the Aus property market with my aussie mates and they mentioned the worldwide 1989 recession when interest rates went to 18! pc in Australia and people couldn't service their mortages.

I mentioned that not only did ours go to 15 pc but home values were cut by 30pc or more.

I was told that this didnt happen in Aus - the prices just stopped going up. So at least people weren't in negative equity - I'm sure prices went down a bit of course. Supply and demand and all that - but not a crash!

Q1.Can anyone confirm this? That home prices in Aus always go 'up'?

We seem to be experiencing ultra low interest rates in Europe and esp in the UK - which is why we dont want to go in to the Eurozone as Blair knows.

Q2. Does Australia has the kind of economy where their interest rates are also likely to be low for the foreseeable future or they likely to experience some sort of 'shock' which will push rates up - a lot.

badgers

r.bartlett

i stil believe that you are approaching it from the wrong angle..

low interest rates in themselves do not promote a boom and high interest rates in themselves don't promote a bust..

i remember my first mortgage was 13% and everybody thought i'd got a good deal..

rates are all relative...they are what you experience -nothing more nothing less..
if you can afford to repay at 20% it's no different to affording to repay at 3%

the boom/busts are more closely linked to jobs -in confident times we all feel that our companies are 'going places' loads of jobs advertised -can't cope etc

this give an impression of infailability and 'confidence' that we can afford that bigger house and it's mortgage and hence go out and get it..

when we see that business is slow (which it has been now for a few months) and we start to notice that 'x' has shed 1000 jobs and 'y' has closed its uk company down then we start to wonder if we can afford that new house/mortgage

this lack of confidence makes us tighten our belts -spending in all area goes down, recession slowly creeps in and bust time awaits

it's all cyclic and within ten years the next boom will start and people will say 'ah but it's different this time'


cheers

richard

kevmitch

From what I've read, there are 'property hotspots' where prices have rocketed over the last 18 months - and are now overheated, but in a report in today's Sydney Morning Herald, prices were predicted to grow in general 16% this year, with little evidence of a major slowdown.

Locally prices may fall (or in reality not reach the asking price) - and given the costs associated with buying, you may not get a return on your investment for the first couple of years.

Kev

Don

Despite the lack of capitals, this bird knows what he's talking about. Think: REAL interest rates, REAL cost of borrowing and you might get somewhere. Confidence is also KEY.

r.bartlett

THANKS DON YOU ARE VERY KIND...


cheers

richard