Wednesday, March 19, 2008

House market downturn spreads -

"The central bank today said the housing market has softened, with the top end as well as the lower end of the market now being hurt by higher interest rates after strong growth in prices in 2007."

More from this article here

Perth prices only went up 1.1% during 2007. There are also predictions that as soon as the US economic woes spread to Australia in terms of job losses, housing prices will fall. An expert last night on Lateline on ABC said that the reason house prices have not dropped are because this generation of Australians (thats us, naughty, cocky Generation Y) have never seen a proper recession and never seen house prices drop. Gearing themselves up for a home loan which requires 40% of their income to service does not phase us.. and that is the problem.

As soon as reality hits, prices will probably plummet.

For the time being its good to sit tight, avoid the share market, invest in a bankwest Telenet saver account (and get the $40 cashback ) and earn a guaranteed 7.75% interest until house prices drop.

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