No relief for first-time buyers as house prices to keep rising

The media are always on the lookout for something out of the ordinary, go back one year when the rates were high,there was a different set of numbers for sales volumes,fast track to this time next year ,if the rates go the way i think ,then the numbers will be different,I like a quote by Sir Richard Branson,"why pay a premium for advertising space half way through the news paper,when you can be on the front page for free,willair..
It's a viscous web they've weaved , where to from here and no body knows.
Right when the country and our too higher prices in reality were about to find perspective, along comes interference .

Even Turnbull or whatever his spelling is, said the stimulus would force up prices , possibly ignite another boom and re'throw everything out of whack. I know many will disagree with me but that's exactly what it's done if you ask me .

I feel that when people say oh but this only accounts for 20% or that only accounts for 15 % , just think of the economy as like any other business .
10 or 20% is many businesses total profit margin , 20 can literally make or break most business, I think it's a much bigger deal than what people think.

What happens from here as rates rise and wind backs reintroduce reality , really is anybodies guess I reckon and actually according whatever economist you care to listen to it is.

The Age , our media just jumps on anything that will have them.
One report tonight said they expect particularly first home buyer loan defaults could triple by the end of 2010 as a result of artificially re inflated prices from grants and now coming rate rises .
I reckon we need 2-3 yrs from here now before we'll have the real finished product .

And now they're in a pickle...

Rate rises may backfire

Businessspectator said:
Triguboff now says: “If the Reserve Bank insists on raising interest rates in the hope of suppressing prices, then they must understand that they will in turn suppress construction.

“Banks are still very cautious and will insist on decent margins of profit, otherwise they will not advance loans to developers. I know that the Reserve Bank does not want to do it, but they have to make up their minds. Interest rates should not rise until building activity increases significantly. That is the true reasons for raising interest rates – stop oversupply. But all the evidence and rents and prices point to undersupply for the foreseeable future.”

What Triguboff is highlighting is that the dramatic rises in Australia's population complicate the interest rate argument. The Reserve Bank will not halt interest rate rises because of the Triguboff warning, but they need to understand that their current decision making process may create the opposite of what they expect in long-term dwelling prices.
"Even Turnbull or whatever his spelling is, said the stimulus would force up prices , possibly ignite another boom and re'throw everything out of whack. I know many will disagree with me but that's exactly what it's done if you ask me ."

I agree with this statement. I'm a single first homebuyer from Perth and my budget is currently 250k with no strata fees. A year ago I put in an offer on a duplex in Kewdale that was advertised @ 259k for 220k. The owner accepted another offer for 229k and I kept looking. Then the FHOG boost was announced and this end of the market catapulted. I groaned when it was extended for the 2nd half of this year and can't wait for the grant to return to 7k. Currently, it is near on impossible to buy a home for 250k within a 15km radius of Perth. Thankfully it has given me another year to save for the deposit, but the lure of an extra 7k for first homebuyers has been negated by massive price increases in my target areas.

Bring on the new year!
And now they're in a pickle...

Rate rises may backfire

I agree, the reserve bank are been way too greedy and I have no doubt they are going to screw up the Aussie economy by raising rates again and again and again... look out, if you own a mortgage as times are about to get very very tough and if your in the building industry, it will come to a screaming halt shortly.
wait - so if you rent - times are gonna get tough and if you have a mortgage - times are gonna get tough so......

Naah this rate rising thing is a weird one and in my view pretty rediculous seems as Kevy's just blown all that dosh trying to keep the place a float.

May as well stick a bloody big pin in it !

Um . cheers .
It proves only one thing.

The rich get richer and the poor get poorer.

I really don't think this is the case at all. So what is poor... not owning a nice PPOR, or IP's perhaps, or is it earning a low income supplemented with government assistance and renting. I say it's another group like those with illness or significant social problems that manage to survive at the most basic level? These however are not the people the media articles write about.

The 'poor' of today are wealthier than the poor of a few years ago and the opportunities for the poorer group to become richer or improve themselves remain little different to the last decade or so.

So many items that were luxuries years ago are now necessities that people yearn for bigger and better things which inc. homes, cars, furnishings an holidays. The mindset I'm seeing develop is that people are feeling hard done by for not having everything they desire NOW.

I actually think it's about time the media did a few stories about the huge shift in FHB expectations in the last few years.

A lot of the older members here who remember the mostly basic and cramped housing most people lived in and the sacrifices many of their parents and grandparents made to be able to purchase a home would know exactly what I'm talking about.
And with just eight selling weekends remaining before Christmas, all the signs are pointing towards an edge of panic having entered the market.

I love this bit.

What has Xmas got to do with anything? The world is not going to end on Xmas day (or will it? :rolleyes:) You can always buy in - god forbid - February, for example. Or - shock horror - March.

For what it's worth, FHB's have never ever had it easy until the grants came in.

Years ago, the FHB's went along to the Bank wearing their Sunday Best suit, with cap in hand asking for an 80% loan after saving their deposit from years of sacrifice.

Then, they put sheets up on the windows for curtains, and saved for more years for the fences and the gardens, and drove or public transported it from their little 2 or 3 bed home with one bathroom and no garage into work from the outskirts of civilisation.

They sat on second hand furniture and went without - no credit cards back then, and no Harvey Norman 3 year interest free terms.

Now, they just ring up Devine homes or one of them, sign over the grant and walk in, set up the Latte machine and flick on the Foxtel on the plasma.

Get real.

The demographics of the media are for people aged between 18 and 39 generally, and it is not in their interests to tell folk how hard it was "back in the old days". This is suicide for their business to lecture the customers, so they focus only on the here and now; how hard it is "NOW".

And where was Mr.Kain looking? I'll bet not here:

or here:

or here:

This was a 30 second search. Imagine how well you could do if you were devoting a few weeks to it.

Sorry; cry me a river and read my sig;
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I'm afraid it will only get harder for First home buyers but they should not give up because it's not too late yet.

Those who only just qualify for a loan should buy now IMO because as interest rates increase their borrowing capacity drops so it can only get harder for them to get a loan.

Those people should buy before
a) prices move
b) interest rates increase.

Fighting the market trying to save $5K and $10K is of no importance
because in percentage terms $5K or $10K is only a tiny portion of the property value.

IMO if you are a first home buyer you should buy sensibly and if you find something you like buy it and put subject to finance in the contract.
Also, if one lender turns you down don't give up, try another lender or a mortgage broker.
(I wish someone had said this to us when we were buying our first home)
It's hard to say IMO if things are harder now than 50yrs ago, a lot crazier that's for sure , especially OZ has swapped one form for another . Over lawed , censored , licensed, taxed, governed, 3 new epidemics a wk, we're all spied on , permits , the fuss is ridiculous ,400k first homes so where's the line , got me .
They certainly worked a lot harder and when they say built their own home, often literally , my dad did. Now it's a builder and I built this house, it's a bit tough , the mic and plazma's aren't top shelf and damn the the ducted vacume and air's late but we don't mind. My folks started with boxes and Hessian curtains and dad and 2 mates building the house on w/e. Actually the car also had Hessian on 2 windows saw a photo.
He worked 12 and 15 hr days, rode his bike 15miles into work and then home again for the first 5 yrs.
But when I got my first business loan 23 yrs ago , I just took in my home made work book , we had a chat, shook hands and I that was it.
I bought my first property v/t, the same. Rates hit 17% but that was much easier than now , the property was 1/10th the price and I was earning 1400 a wk with my business. Working that business now the same way would be impossible and it would would pay $700pw , I worked it out but the same property is 500k , work that one out.
My dad started his own business, ended up rich and owning properties all over the place, monster boats , and huge hobby farms. One he bought for 500k on a hand shake , don't see that much these days. Actually he bought a few like that .
My brother took over that business and just went broke actually, closed the doors a mth ago. All the laws , taxes , costs , fuss and crap involved just milked it dry and he couldn't make money anymore.

So where are we now. I plan on staying right here up on the Great Ocean Rd and having a good old chuckle at the rest of it from a far and safe distance. Do up a few properties , enjoy the ocean everyday, fun with my family , go green and all that jazz.

My dad says it's harder now but in totally different and very stressful ways . He says cars a cheaper now which threw me at 30 and 40k , but when he pointed out wages back then he was right.
He reckons he wouldn't run a business now for quids and wouldn't know where to start with all the crap involved in getting finance , paying a bill or employing someone.


PS , my daughter can't believe me and wifey survived childhood without a DS, that's a funny one , she was dumbfounded !
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Those people should buy before
a) prices move
b) interest rates increase.

i think that's bad advice.

my advice to a FHB woudl be to buy when IRs are high.

that way, as the IR's stay stagnant or move in smaller increments, affordability is maintained.

affordability increases as wages grow or IRs drop.