•
The value of Aussie homes increased in the first quarter of the year, bucking a global trend downwards!
House and flat prices in Australia increased in value by 1.6% in the first three months of the year, helped by a scarcity of supply, lower interest rates and incentives to first-home buyers.
The slight recovery in Australia “has been driven by the 40% fall in home loan rates down to 5.7%, which are now at their lowest levels since July 1968!”
March’s three-month gain follows a 0.1% rise in the three months to February in the RP Data-Rismark’s national dwelling value index, and a 3% fall in the value of “cap” city homes in 2008.
The strength of Australian housing prices is a world away - so far - from the 2.7% drop in British home prices over the first quarter, capping a year to March 17.5% plunge.
US housing didn’t fare too much better either, with prices in the top 20 cities sinking 1.9% in February, which brought the 12-month fall to 18.6%, according to the most recent S&P/Case-Shiller index, a widely followed measure.
RP Data-Rismark said the first-home buyer’s grant, ending June 30th, has acted like a catalyst for new home buying in Australia, but lower interest rates are sustaining the market’s growth.
•
Industry advisers say the combination of falling interest rates and rising rents have presented a once-in-a-generation opportunity to invest in the property market. Mortgage rates have fallen from an average of about 9.25 per cent to 6.9 per cent, and some financial experts predict official interest rates will fall to 3.25 per cent by the middle of 2009.
At the same time, the recent fall in property prices in major cities has seen rental yields as high as 4-5 per cent on well-located properties.
While many property investors are tempted to sit back and wait till the market bottoms out next year, some property experts say the time to buy is now.
The Real Estate Institute of Victoria also advises it is a good time to invest.
REIV president Adrian Jones said that for the past two years rental vacancies had been hard to find in Melbourne, a sure sign that investors could achieve a decent return.
It is also a buyer’s market, making it easier to find and afford an investment home.
“The cost of borrowing has fallen substantially but returns on investment, the rental paid by tenants, has not,” Mr Jones said.
Finally, Melbourne has a growing population, which will translate into growing demand for housing.
Read the full article here: http://www.news.com.au/heraldsun/story/0,21985,24764359-5013926,00.html
Paul Castran