Demand-in-property-high
As stock levels are still very low, it comes
as no surprise that leading economists are
all saying the same thing, that new housing
stock is desperately needed.
In a speech given recently, Mr Stevens, the Reserve Bank governer agreed with
others that the fall in interest rates together with the extra grants for first-home
buyers has resulted in a large pick-up in demand for property.
A very real challenge in the following term is how to guarantee that the ready
availability and low cost of housing finance is translated into more houses and
units, not just higher prices,' he said.
The scheme has also been extended until the end of September, and then it
will start to wind back ,halving from October until December. Glenn Stevens said
in a major speech in Sydney that property prices need to be kept under control
and that means more supply is required. He added that the global outlook had
improved and emphasised the role of business and consumer confidence in
helping to lift the current economic conditions.The low cost of finance available
and a reduced supply of new housing in the market threatens to create a property
bubble in Australia. In contrast to many other countries, house prices are tending,
if anything, to rise, and the rate of arrears on the majority of mortgages remain
very low by historical and international standards,' said Stevens. If we fail to do
that, if all we end up with is higher prices and not many more dwellings, then it
will be very disappointing, indeed quite disturbing,' Stevens said. The real estate
market in Australia has held up well during the current global economic downturn,
which economists have attributed to the government's increased first home
owners grant, amoung other things. Given the circumstances the economy moving
to a position of less than full employment, with labour shortages lessening and
reduced pressure on prices for raw material inputs, this ought to be the time when
we can add to the dwelling stock without a major run-up in prices,' he added. He
also explained that the value of loan approvals has risen by about a third since
the low point in the middle of 2008, but it is the upcoming months that will be
crucial for the Australian market.
Locally there is still a strong number of buyers who are having difficulty with finance.
Most can get the finance from the bank, but are then having difficulty with mortgage
insurance. Many examples of small defaults of $50 and $70 from overlooked phone
accounts from 3 and 4 years ago is enough to stop the best applicant for finance.
Buyers really need to be in a strong financial position with no bad history at all.
04/09/2009