Mortgage Interest Rates in Oz & Possible Property Boom

[surhythms]

Hi Guys

 

I was having a look at the possibility of buying in Oz. We arent there yet - we dont even have our visa :biglaugh: but we are on our way, I just like to get in there and do loads of research.

 

We are looking at the affordability of houses and it seems do-able but I noticed that the mortgage interest rates are around 6% !!!!!

 

Does anybody know if this has always been the case in Oz - I know in Ireland at the moment my mortgage interest rate is 3.1% but thats probably due to the country being in a right state at the moment. 2 years ago i was paying nearly 5% interest rate so Im just wondering if there is a property boom over in Oz at the moment.

 

I know we can get alot more for our money in Oz but because the interest rates being so high and the exchange rate being absolutely crap its made me wonder!

 

Any comments would be much appreciated

 

Suzanne

[gpo1971]

6% is still low compared to pre-GFC, it will go higher, probably another 1% this year.

 

House prices are rising and will continue to do so.

 

Mind you, I lived in Dublin for a year and couldn't believe how expensive that was.

[surhythms]

6% is still low compared to pre-GFC, it will go higher, probably another 1% this year.

 

House prices are rising and will continue to do so.

 

Mind you, I lived in Dublin for a year and couldn't believe how expensive that was.

 

:arghh: Higher??? Im reckoning you are having a bit of a property boom over there at the moment just like Ireland did from 2002 - 2009. House prices are now averagely 40% cheaper in the last 12 months. Dublin is really expensive aswell but if you were here in the last year you can actually see that things have reduced in price.

 

Doesnt make me want to stay though!!

[Guest guest30038]

The median price in my suburb is 410,000. The 10 yr forecast has it set to reach 1.3mill

 

My property is currently worth 600,000............Think I'll be downsizing in 10 yrs :biggrin:

 

kev

[Guest chris955]

Yes I think it is fair to say there is currently a boom, not a good thing obviously for people wanting to buy. Housing affordability in most areas is at an all time low, anything from 5 to 8 times yearly wage.

Our house went from $115,000 to $400,00 in the 9 years we have been here with no sign of it slowing down.

Interest rates are expected to go up at least another 1% this year.

[surhythms]

Yes I think it is fair to say there is currently a boom, not a good thing obviously for people wanting to buy. Housing affordability in most areas is at an all time low, anything from 5 to 8 times yearly wage.

Our house went from $115,000 to $400,00 in the 9 years we have been here with no sign of it slowing down.

Interest rates are expected to go up at least another 1% this year.

 

 

OMG:wacko:!!

 

It sounds like what happened in Ireland a few years ago from 2002-2009 is happening in Australia now - ah well the bubble will burst and then prices will decrease yet once again - it all goes in cycles really doesnt it?

[pablo]

OMG:wacko:!!

 

It sounds like what happened in Ireland a few years ago from 2002-2009 is happening in Australia now - ah well the bubble will burst and then prices will decrease yet once again - it all goes in cycles really doesnt it?

Im no financial expert AT ALL,BUT i cant see the bubble bursting THAT much,theres thousands wanting to migrate there so i cant see house prices dropping when theres a steady supply of people moving there and wanting property?

From a PURELY selfish point of view im HOPING they do drop because im not there yet,plus from when we started the process till now the exchange rate has lost about a $ to a £.

I just think australia is a different kettle of fish to europe when it comes to things going in cycles,purely because of how its growing all the time,but i hope im wrong:yes:

[surhythms]

Im no financial expert AT ALL,BUT i cant see the bubble bursting THAT much,theres thousands wanting to migrate there so i cant see house prices dropping when theres a steady supply of people moving there and wanting property?

From a PURELY selfish point of view im HOPING they do drop because im not there yet,plus from when we started the process till now the exchange rate has lost about a $ to a £.

I just think australia is a different kettle of fish to europe when it comes to things going in cycles,purely because of how its growing all the time,but i hope im wrong:yes:

 

I can see your point but if house prices get so high how will people be able to afford to get a mortgage if their salary does not match with what they are expected to pay. Its happened in Ireland whereby people were getting 100% mortgages interest only (luckily not me):biggrin:. Now Im no financial expert either but surely if people cannot afford to pay mortgages the banks in Australia wont be silly enough to give people a loan. Thats what they did here - gave people ridiculous mortgages and now they cant pay them. Once it is all relative and salaries match the ability to pay mortgages I dont mind !! No bank could be as stupid as the Irish banks to be honest- sorry but it had to be said.

[pablo]

I can see your point but if house prices get so high how will people be able to afford to get a mortgage if their salary does not match with what they are expected to pay. Its happened in Ireland whereby people were getting 100% mortgages interest only (luckily not me):biggrin:. Now Im no financial expert either but surely if people cannot afford to pay mortgages the banks in Australia wont be silly enough to give people a loan. Thats what they did here - gave people ridiculous mortgages and now they cant pay them. Once it is all relative and salaries match the ability to pay mortgages I dont mind !! No bank could be as stupid as the Irish banks to be honest- sorry but it had to be said.

Yeah i know what your saying,but irelands was a MASSIVE/SUDDEN boom wasnt it?

I had loads of mates from lpool over there working for instance,all im thinking is that australias growth has been STEADY,not boom and bust kind of thing?

I hope as you say that there is a slowdown on house price rises in oz,but im just thinking it wont go the same way as the UK or Ireland,I.E they "wont" drop rapidly.

But heres hoping:biggrin:,sorry to all the homeowners in oz btw:biglaugh:

[cazmayo]

have noted the average price of a house in perth is 450,000. the average wage is 50,000 so that is a 9:1 ratio!!!!! surely it couldnt keep going. think it is the mining and gas projects - well paid, and new migrants, the demand outweighs the supply.

 

here in ireland, there is an oversupply of houses. there was no control on how many houses got planning. not linked to demand. in perth the government control big parcels of land for development.

 

have a house here to sell??? thinking of renting out, due to housing market and exchange rate. ahhhhh.

 

cheers caz

[Guest guest30038]

Australian investors have a huge stake in the housing market. I'm not talking about big business investment but your average working bloke. Many have chosen to invest in property as opposed to superann and pick up the benefits of negative gearing in the process.

 

They buy a house, rent it out, and show a loss (negative) against their personal taxation. Once that rental becomes positive (rent incoming more than outgoing [mortgage and maintenance]), they purchase another and go back into negative and so it goes on.

 

I know a brickie who flogs his guts out every day in the raging sun and he owns (well, some of 'em are mortgaged) 9 investment properties. When he retires he will either capitalise these properties and buy a pension with the cash, or live off the incoming rents.........they become his superann.

 

I can't see this system ever changing. They tried to do away with negative gearing before and I think it lasted about 8 months and had to be re-introduced due to the near collapse of the housing market. I'm no financial expert, but as long as negative gearing survives, so will the property prices continue to rise.

 

kev

[LYNMACMD]

Have to look into doing some of that Negative gearing if that's the way to be a property developer lol

[nickyc88]

I'd be interested in finding out more about this 'negative gearing'... Is it part of the tax/superann rules? Sounds like it's pretty critical to house prices continuing to rise. I'd be devastated if I bought in Oz just before a massive crash! :unsure:

[Mongrel]

The median price in my suburb is 410,000. The 10 yr forecast has it set to reach 1.3mill

 

My property is currently worth 600,000............Think I'll be downsizing in 10 yrs :biggrin:

 

kev

 

 

If we are still breathin mate esp you old boy

[Mongrel]

I'd be interested in finding out more about this 'negative gearing'... Is it part of the tax/superann rules? Sounds like it's pretty critical to house prices continuing to rise. I'd be devastated if I bought in Oz just before a massive crash! :unsure:

 

Why all the **** do you want to emigrate for family life , personal life or , private wealth or gain , just go with the flow life aint no rehearsal ,you get one chance LIVE IT

[Bluecatcollectables]

Hi Suzanne,

Yes, the interest rate is rather high. The aussie government is currently facing a dilema.

They are looking at putting up the interest rate, thus avoiding inflation, and giving the dollar extra strenght on the currency market, which does not bode well for the exchange rate.

 

However on the flip-side, less people will be able to afford a home and will be renting a lot more.

 

Unfortunately, if the Australian Government is not careful, the housing market could collapse in on itself, if people, who already in debt up to the hilt, face reposessions. I actually believe that they are pricing themselves out of the market quite considerably. Having regulary checked on the house prices over there for near on two years now I know for a fact that a 3 bedroom house of good standard was on the market for approx. A$350,000. This has now gone up to A$520,000 +. Almost doubled! It has got to stop, unless Australia wants to become known as a Renters Paradise. Also the prospect of living over there deminishes, if you have to lower your living accomodation standard from your present one.

Fingers crossed something sorts itself out soon.

Blue Cat Collectables:wacko::swoon:

[Mongrel]

Hi Suzanne,

Yes, the interest rate is rather high. The aussie government is currently facing a dilema.

They are looking at putting up the interest rate, thus avoiding inflation, and giving the dollar extra strenght on the currency market, which does not bode well for the exchange rate.

 

However on the flip-side, less people will be able to afford a home and will be renting a lot more.

 

Unfortunately, if the Australian Government is not careful, the housing market could collapse in on itself, if people, who already in debt up to the hilt, face reposessions. I actually believe that they are pricing themselves out of the market quite considerably. Having regulary checked on the house prices over there for near on two years now I know for a fact that a 3 bedroom house of good standard was on the market for approx. A$350,000. This has now gone up to A$520,000 +. Almost doubled! It has got to stop, unless Australia wants to become known as a Renters Paradise. Also the prospect of living over there deminishes, if you have to lower your living accomodation standard from your present one.

Fingers crossed something sorts itself out soon.

Blue Cat Collectables:wacko::swoon:

 

Live it and stop speculating ,you moan on here about times for visas and **** get yewt visas and moan about summat elase , if you want summat so bad just go for it

[Bluecatcollectables]

Live it and stop speculating ,you moan on here about times for visas and **** get yewt visas and moan about summat elase , if you want summat so bad just go for it

 

Love to put my two-penny's worth in. Especially since there are like-minded people out there. :yes:

[Mongrel]

Love to put my two-penny's worth in. Especially since there are like-minded people out there. :yes:

 

So you are a rip off merchant cant find the finger smily , we came here with little , rented for 2 years and bought us a house , big risk i am 50 same risk in the uk ,same risk ridind the freeway , I am constantly pissed off with peeps moanin they cant get their visa when they do its all about interest ratews and money , me its about going to work down the west coast highway and not thro dalton rotherham , about spendin my time at the beach fishin without a commute , me nad oh not at war every day (oinly every 2) its about livin not existin . The next bus mite have your name on it

[Guest guest30038]

I'd be interested in finding out more about this 'negative gearing'... Is it part of the tax/superann rules? Sounds like it's pretty critical to house prices continuing to rise. I'd be devastated if I bought in Oz just before a massive crash! :unsure:

 

OK, I'm no financial wizard but my understanding of the basics are this: Negative gearing is a means to reduce your personal taxation. Tax benefits arise from showing a loss on investment. You can borrow money to invest in property, shares, or other investments. A tax allowance is provided if the borrowing costs from your investment exceed your income from that investment. Look here: Borrowing money and negative gearing - Australian Securities and Investments Commission

 

No astute investor would show a loss unless there is an expected profit later down the line. The moment you profit, is the moment you commence to pay tax as opposed to receiving tax beneits, so you then set yourself up for a further loss, by borrowing to purchase more property or shares, again, with a view to eventually making a profit.

 

If you continue to do this, one may ask, where is the profit? The profit is in the (sale of the) capital (less capital gains tax) when you retire or when you think the market is right for capitalising on your purchases. Considering that investors continue to "indulge" in negative gearing via property, (on advice from their accountants) it is pretty safe to assume that they expect a long term profit when they sell their capital (houses or shares purchase price less than sale price). This should indicate that property is a safe long term investment...........but...........in a capitalist sytem...........nothing is assured.

 

kev

[nickyc88]

Thanks Kev. I understood all that! Not sure I'd try it myself but good to know the system isn't likely to fall down around our ears! Cheers,

Nicky

[spottydog]

Having regulary checked on the house prices over there for near on two years now I know for a fact that a 3 bedroom house of good standard was on the market for approx. A$350,000. This has now gone up to A$520,000 +. Almost doubled! It has got to stop, unless Australia wants to become known as a Renters Paradise.

 

I guess you are talking about Perth as I haven't seen that in Sydney. Of the areas I watch in Sydney over the last 4 years Sutherland Shire has been lucky if it has seen 10% gains, western Sydney is probably about break even and inner west has probably seen gains of up to 20%. Anything not in Central Sydney has probably performed less than inflation although if you bought the property as an investment you will have seen your rental income grown significantly more over the period than the house price (percentage wise)

[Guest chris955]

The Western suburbs had a big growth spurt a few years ago and then slowed down when people realised it really wasn't a great place to live.

[gpo1971]

I don't get the logic of flogging your guts all of your life so that you have 9 houses when you retire. What about the rest of your life (younger) that you've just wasted, working yourself into the ground? I have rellys like this who work like Trojans (to the detriment of their relationships), miss out on holidays, spend less time than they should with their kids, move every 6 months in an attempt to cash in on or cheat the market, are constantly stressed by juggling their finances etc etc. They might have some extra cash when they're 60 but their life now, and for the last 10 years, has been wasted. Pointless.

[Bluecatcollectables]

I don't get the logic of flogging your guts all of your life so that you have 9 houses when you retire. What about the rest of your life (younger) that you've just wasted, working yourself into the ground? I have rellys like this who work like Trojans (to the detriment of their relationships), miss out on holidays, spend less time than they should with their kids, move every 6 months in an attempt to cash in on or cheat the market, are constantly stressed by juggling their finances etc etc. They might have some extra cash when they're 60 but their life now, and for the last 10 years, has been wasted. Pointless.

 

 

Totally agree with you Mate! We aren't even guaranteed to see pensionable age! Also it is actually the little things in life that makes it worth living ). Just have a day dream every now and then and see how happy that makes you.:cute: