renth

Because inflation is increasing. Interest rates are too blunt a weapon IMO as they mainly hit people with mortgages which I believe is about 33% of households with one third renting and one third owning properties outright.

Rudd really ought to think about canning the huge tax cuts (an election promise, won't happen) or raising GST to, say 20% (again, is that really going to happen?)

Brav

Yes but isn't the interest rate something like 7.5%? And inflation round 3%? Why is it well over double that?

NickyC

That's true. Price falls are occurring in the far, outer western suburbs - unfortunately few migrants want to live in these areas.

However, prices are still rising in the affluent eastern and northern suburbs - where everyone wants to live. They've never dropped around here - they were stagnant for a couple of years from 2003 and have been slowly rising since.

There really is two markets in Sydney.

Wol

Apples and oranges. Different things.

renth

4%. I've even heard talk of a .5% rate rise this week.


"THE soaring cost of rent and vegetables has sent inflation jumping to a six-year high, as the Prime Minister warned that fighting rising prices will bring more pain to already struggling families.

In the 12 months to February, inflation was 4.0 per cent, according to a TD Securities/Melbourne Institute survey. "Price pressures are more broadly based than just food and petrol," analyst Joshua Williamson said."

http://www.news.com.au/business/stor...80-462,00.html

Vim Fuego

Don't talk about fruit too:
http://britishexpats.com/forum/showthread.php?t=518655

It's financial hellhole here

jad n rich

Australia seems to go through mortage rate panic every couple of years, this is only based on since we have been here so the 2000's.

Inflation (usually food and petrol prices ) rise so the tactic here is put interest rates up to stop people spending, media causes mass panic, this is the one headline that knocks sport off the front page, the public have a panic, spending eases a bit.

Interest rates this time are going to be totally out of whack with the rest of the civilised world bar new zealand Govt will probably raise them a couple of times before totally stuffing exports and anything connected with the strong aussie dollar.

My guess ( and I see now that also by a couple of economists ) is by next year it will be interest rate cuts not rises, then guess what happens.

Main spanner in the works could be Rudd knocking out negative gearing which bascially has investors renting out private homes for about half the price of the mortage on them. If that goes, the whole apple cart will go ass up. But I dont think even Rudd is that stupid.

Buy it to live in or buy something that there is not a million of, personally I like beach suburbs ( metres not minutes from the beach ) where old (cheapish) houses are, so many ways to make money from them and always a demand for them slump or not, because punters know they will go up longterm cause there is not an oversupply of them.

Stuffs still selling on this coast, 16 blocks of land released 10 gone in 2 weeks, mates oldish dated house on for 495 went for 490, think there may be some wobbles on the overpriced canal stuff, but nobody with a brain would pay 2.5 million for that anyway.

Coasts usually hold up pretty well, the pension in aus is means tested so when people retire they stuff as much of the money into beachy real estate (own home) so they can then claim a pension.

renth

Well, if the UK is anything to go by the interest rate is cut and the mortgage lenders don't pass the cut on to borrowers, most upped their rates.

jad n rich

Here the rate rise was .25% and some banks put it up more, banks I guess are banks, but they certainly know how to fleece you. But if next year there are 2/3 interest rate cuts, its unlikely they will get away with not passing them on, especially if Rudds still wearing his superhero underwear I imagine he would order some commission into it on behalf of the 'working family'

jad n rich

Speak of the devil>

http://www.theaustralian.news.com.au...25-601,00.html

Wonder if those those 'rebates' will replace negative gearing, odd plan, most investors are already only charging rent of about half of their mortage payments.

and more worringly, just as housing starts slow and with tradies already scratching for work and dropping rates.....

http://www.theaustralian.news.com.au...4-2702,00.html

Brav

What is the underlying problem of the entire deal with housing and food, really inflation in general? I just think a 7% interest rate is outrageous

livinginwa

all this will stop when the mines realise they can get people for less than $150k a year....plus FIFO expenses.

all this will stop if british migrants thought a bit more, when they splurge their cash all over australia.

all this will stop if the aus government stops handing out skilled PR visa's who dont need to work in their profession thus creating a false sense of security on the skilled numbers in Aus.

I dont want a crash but some realisation of what the market can afford,

ie, 3.x's joint income.

in our case joint income $140k

a 4x2 house in suburbia $420k less your 10% deposit= house price @ $380k

monthly mortgage of around $2800

in my case i have opted to rent my UK house so someone else pays my mortgage, this means i can live in a house i want to live in with no DIY or added expenses, that are hidden when subjects like this appear.

rental $1600 a month ,

which means i have $1200 a month to invest or squander, in my case i bought a boat.

northerner

If you read the article they are actually saying that house prices, particularly in the outer suburbs, have fallen over the past few years (since 2002-2004 levels) but are now stable. It's not saying that house prices are 'in landslide' in the current market at all.

Graham

renth

Well, the headline does actually read "prices in landslide" but it should probably say "prices in Sydney's less desirable western suburbs in landslide".

northerner

Or more accurately "prices in Sydney's less desirable western suburbs WERE in landslide"

Graham