Houses are getting more expensive, maybe mortgages won’t

If you’re in the market for a new house at the moment, you may have noticed that prices just keep rising, in pretty much every part of Australia. And unfortunately that’s not just a problem for first home buyers like I mentioned a few weeks back. With a 13.6 per cent rise in the average price of a house last year, even the Reserve Bank is warning that housing prices could continue to rise, and that’s not good news if you’re looking to buy.

On top of that, the shortage of new homes being built – construction figures are at their lowest for a while, despite the increase in the population growth rate in Australia – is contributing to the price of the average house rising, and this doesn’t look like changing much in the near future.

However, it’s not all bad news on the mortgage front. If you have an existing mortgage, then the current rumour has it that at least for the next month or two, the interest rate might remain stable (not much comfort since it’s only just risen, but sometimes you have to be grateful for small mercies!). Analysts are suggesting that because there has been quite a major fall in the amount of lending for home loans, the interest rate might be left alone to encourage more people to take out new mortgages. Recent Australian Bureau of Statistics figures show that in January this year the amount of money being lent by banks as mortgages fell by over three per cent – and one of the major reasons for this, they say, is that schemes such as grants for first home loans finished up or were decreased at the end of 2009 and so the number of people looking for new mortgages fell.

Discuss