First home dream turns into a nightmare
If you’re searching for your first home you’d better find one this week, and you’d better have a healthy deposit, and you’d better hope your job’s secure, and you’d better pick the right suburb and don’t think about relying on the economic downturn to help you out.
No pressure but the Commonwealth Bank and BIS Shrapnel have in the past couple of days butted into the dreams of thousands of Australians and promptly turned them into a nightmare.
Contrary to all dining table predictions BIS Shrapnel today said house prices will go up 20 per cent over the next three years. This as CBA raised its fixed rate, after last week being the first to break ranks and lift its variable rate. Expect the rest of the banks to follow at a respectable distance, as soon as Wayne Swan stops holding press conferences to talk about team work and heavy lifting.
So prices are going up, rates are going up – and you can’t even get the friendly guy from the bank to take your call. And guess what, it’s your fault.
According to BIS Shrapnel’s predictions (which are historically among the most credible), by 2012 median house prices will have risen 19 per cent in Sydney, 20 per cent in Melbourne, 16 per cent in Brisbane, 19 per cent in Adelaide, and 12 per cent in Perth.
This is thanks to “heat” in the market generated by first home buyers taking up the Government’s grant boost. The bulk of the growth, however, is expected to take place after unemployment peaks next year, and at the moment people are dealing with a lack of confidence about jumping into the market.
No bloody wonder.
First home buyers have never been in a more terrifying position.
Unlike their friends who got into the market 18 months ago with a whiff of a deposit and a couple of pay slips, banks are now asking young couples to sign over their first born to secure a loan. You even have to prove you saved half the deposit yourself – if you can get in front of someone to demonstrate it. In Sydney even couples on a healthy dual income report various financial reps canceling appointments on them over and over.
Consoling yourself with the prospect of minuscule interest rates, which were predicted just a few months ago, is no longer an option. CBA has signaled the big banks’ brief flirtation with the RBA has come to an end.
The only thing still in your favour is the Government’s first home owners grant boost, which, ironically, is part of the reason you’re in this mess.
Good luck to the person in Kevin Rudd’s office who has to work out how to calm this perfect storm. They haven’t done very well so far.
In the meantime - you’d better hurry up and find that perfect dream home.
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