Showing posts with label borrowings. Show all posts
Showing posts with label borrowings. Show all posts

Friday, August 1, 2014

Housing Price Supply and Demand

From the AFR on 30 July 2014, p. 28

"Recent house price appreciation has been driven by more than simply a strongly growing population.  Low interest rates have encouraged domestic investors to allocate assets into housing.  Foreign investors have also been buying.  A reduced rental return on housing would eventually discourage domestic investors but probably comes with a lag.

The apparent equalisation between an undersupply of housing versus strong demand for dwellings in major metropolitan areas comes as the official cash rate remains at a record low of 2.5%, and as the major banks lower their fixed rate home loans in an attempt to entire more people to borrow more."

This article applies more to the Sydney and Melbourne markets than Brisbane.  It is important to look at individual markets, and not take southern trends and blindly apply them to Brisbane.

Wednesday, May 23, 2012

Heavy Gearing


According to the OECD, Australian households remain heavily geared with a high ratio of household debt to disposable income(183.7%), but this has declined from the pre-GFC level of 186.4%.  In 2000, this ratio was 124%.  The OECD average was 98%.  See story here.

Many Australians are prepared to borrow heavily to buy a residence, believing that "rent money is dead money".  But that is not always the situation.  Buying a house or apartment for the short term is often a bad decision.  And if you have to move with your job, as some Qantas engineers found out recently, owning a house can be a liability.