Home Loans Growing
Anyone looking at purchasing a property during 2010 will need to do their sums very carefully. Interest rates are rising and, in what should be a warning, more home-owners, particularly recent first-timers, are coming under increasing mortgage stress.
Of the 251,000 households in which owners became first-time buyers in the past 18 months, almost 40 per cent — or 101,000 — are experiencing some form of mortgage stress, with 30,000 of those experiencing “severe” mortgage stress, according to Fujitsu’s Mortgage Stress Report for January.
First Home Buyers
First Home Buyers need to be especially careful. Unless they have a very “robust” budget they can easily get into trouble. Given that interest rates are expected to go up during 2010, any budget prepared needs to take into account these potential increases.
A senior analyst at Canstar Cannex, Harry Senlitonga, says first-home buyers need to restrict their borrowing. “Many first-home buyers have never experienced a time when prices have fallen,” he says. Some commentators think there is the potential for a property bubble and buyers do not want to end up with negative equity in their home — where they owe more than the house is worth, he says.
Prices in all Australian capital cities have recently seen significant increases.
Melbourne’s median house price is almost $500,000 and almost $411,000 for units. Sydney and Melbourne houses are now among the most unaffordable in the world.
In the second half of the year, Sydney and Melbourne prices were pushed up by upgraders and investors. There were particularly big price rises in wealthier suburbs, especially in Sydney, which had suffered the biggest price falls in 2008. Unlike Sydney, Melbourne’s prices have been rising strongly for the past few years.