Raising rates on mortgages will lead to cheaper Australian housing

03.11.2010 09:24
Today, the country's central bank will decide about further increases in base rates. May depend on the dynamics of housing prices in the country.

In the last year and this year, housing prices in Australia has steadily increased. In the II quarter of the level of annual growth of 18.4%, which made this country the fifth largest in the world ranking of countries leading in the rate of house inflation.

This situation has forced the government to take retaliatory measures. Among these was the reduction of subsidies for the purchase of first home with a $ 21 thousand for the primary market and $ 14 thousand for the secondary market to $ 7 thousand, as well as an increase in base rates on loans from 3% to 4.5%.

As a result, housing prices in the III quarter of its growth slowed to 2,7% in Melbourne and 0.9% in Sydney, Adelaide and Brisbane have decreased by 1,4% and 2,1% respectively. Throughout the country, the average cost of housing has increased from II to III quarter by only 0.1%, according to the Australian Bureau of Statistics.

According to a leading economist Australia & New Zealand Banking Group Paul Breddika, purchase of residential property has become less accessible to the public. On the other hand, the demand has become less "speculative" and returned to normal levels, reports Bloomberg.

Currently, the Australian authorities are considering raising the base interest rate on loans from 4.5% to 4.75%. In this case, mortgage rates also rise, which will have a moderating influence on price growth in the property market in 2010-2011, I am sure Breddik.

Note that some realtors say the inflow of customers in terms of price stabilization. This applies both to investors who expect the appreciation of objects, and first home buyers who rush to make a purchase until prices or mortgage rates have not started to grow. Increased demand could trigger a new round of price growth.

Economist at CommSec Savant Sebastian also expects to further increase the cost of housing. The reason for this, in his opinion, will be high demand from emigrants to the shortage of new supply.
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Content tags: Overseas property
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