 Housing values set to increase
Leading forecasters are predicting house prices to rise nearly 20 per cent during the next three years.
This would increase the average house price by $100,000 by the end of the three years.
BIS Shrapnel conducted the research for QBE
Lenders Mortgage Insurance and forecasts prices will rise 3 per cent this financial
year, and 8 per cent in each of the following years. This jump in house values comes at the same time that the government boost to the first home owner grant winds down, which means that many first home buyers will be pushed out of the market again.
Due to a chronic shortage of housing and increasing population the conditions are set for rising values.
Ian
Graham, QBE's chief executive, said this would add $15,000 to the price
of a $500,000 house this year, $41,000 next year and $44,000 the year
after.
During the current climate where interest rates have been at record lows for some time, housing affordability had risen. But with rates now on an upward swing, this could all change very quickly.
The first home owners grant is gradually being reduced, as the boost that was announced last year winds down, and the grant reverts to the original $7,000 by January 1.
Interest rates are on the way up, with the Reserve Bank of Australia lifting official rates by 25 basis points last week, prompting banks to raise mortgage rates by the same amount.
Mr Graham said the recent positive economic figures and low rates made now a great time now for both investors and first home buyers.
Vacancy rates will be kept low as the current shortage of housing continues, which would
push rents higher and make property a better investment.
Interest rates are set to rise again when the RBA meets in November and economists are not ruling out further rate rises during 2010, predicting the cash rate could rise from 3.25% to around 5% by this time next year.
Consumer confidence is on the rise currently, as record low rates and improving economic outlooks emerge. However, if rates keep rising as predicted, and house prices push people out of the market there could be implications for consumer sentiment.
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