The effect of gravity on property value blast off
The SMH suggests the end of the current housing boom may be in sight, with prices leveling off into a more sustainable incline rather than the steep spike of the last couple of months, though as the ABC reports, since the RBA announced the CPI is below what many pundits expects, interest rates are likely set to remain at their current record low at least until June. Sarah Hunter from BIS Oxford Economics is quoted as saying that “CPI will accelerate sharply in the June quarter, and likely print above 3%.”
The important part for home owners and buyers, is about interest rates. For the foreseeable future any upward movement by the RBA is ‘realistically years away’ As Callam Pickering from Indeed Asia Pacific was paraphrased as saying. However, this has not stopped the large banks from raising their record low fixed price loans. Another ABC article reports that Westpac for example has just raised its fixed rate from 1.89% to 2.19%. It looks like the era of ultra-low interest rates might be coming to a close.
Another interesting development is the increase in vendors asking unrealistic prices in Sydney’s already exorbitant market. Domain ran an article that opportunistic home owners are trying to take advantage of the high prices and relatively low stock numbers. The sad thing is that sometimes these highly inflated prices actually sell. The article lists a number of regular suburban properties that sold for a million dollars over the reserve. Great for the vendor, not so much for the buyer who may now be locked into a debilitative mortgage.