 Considering the future
Fears that Australia's property market will suffer when government grants come to an end are growing among experts.
Dramatic cuts in interest rates, boosts to first home buyer grants and other government concessions have fueled the market in recent months. But economists, estate agents and property experts alike are waiting for the end of the grants from September to see the true trend in property.
Aussie Home loans boss John Symond is warning that first home buyers rushing into the market while the boost is still available, could be driving up prices.
"Firstly, it is clear that the Australian economy is showing a robustness that is surprising, and that will probably drive continued health in the property market," he said yesterday.
"But I'm still concerned at some of the prices first home buyers are paying for houses _ many of those properties are overpriced by five to ten per cent.
"They are tripping over themselves to grab (grants of) $21,000 and paying up to $50,000 too much. They need to be very careful."
"Don't be fooled that these low interest rates are going to stay forever, they won't," he said.
The Federal Government's boost to the first home owners grant will be cut from October 1 and then from January 1, both grants will revert to the original $7000.
Experts warn to always factor in an extra 2 to 3 per cent in interest rates when buying a home. Over the course of the loan interest rates will rise and fall depending upon the economy.
But for the time being, demand for new home loans is high and the Housing Industry Association's chief economist, Harley Dale, reported a modest upturn in renovation contracts and in loans for renovations. This data shows that Australian property markets are showing modest strength and now the watch begins to see what happens in the second half of 2009.
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