There were reports over the weekend that house prices will soar for the next three years. I am doubtful of this. As interest rates climb, there will be some first home buyers who over-committed, and there are already reports of investors abandoning their properties and moving into shares. Of all the signs that had indicated house prices would increase, really it's only the increasing population of Sydney that remains valid. First home owners grant is over, interest rates have gone up and are clearly going to go up more, and the NSW state government is in no position to slash stamp duty on house sales. So it seems to me time for "buyer beware" in more ways than just doing building inspections.
The SMH today rather reflects my view. "End of home grant boost to hit mortgate market", says Stuart Washington, quoting a report by the Market Intelligence Strategy Centre (MISC) that predicts a $14 billion decline in mortgage value over the next year.
MISC argues that the drop in value of mortgages written next year could be largely avoided if smaller lenders obtained new sources of lending.
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