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Homeowners face tougher times ahead
TEN per cent of first-home owners who bought their property in the past two years have now either sold their homes, or are considering selling, because the financial stress has become too great.
A survey of homeowners has confirmed rising interest rates and utility bills have squeezed household budgets to breaking point.
The Mortgage Choice survey of 1000 first-home buyers found 10 per cent were selling up and 6 per cent said they would sell if mortgage rates increased by up to 1 per cent from current levels.
Another 14 per cent said they would sell if rates rose by 1.50 per cent.
The findings bear out the concerns of critics of the First Home Owner Grants, who claim thousands of buyers - persuaded to stretch to buy a property at a time of record low interest rates - would struggle to maintain their repayments once interest rates returned to normal.
Now, with mortgage rates at their long-term average and heading higher, the cracks in the Government's big stimulus strategy are beginning to show.
Federal Opposition finance spokesman Andrew Robb said young homeowners had been betrayed by the Government.
"They got totally suckered," he said.
"The Government propped up the market by luring in young people but there were no warnings about what might happen within a year or two - with interest rates in particular.
"Now young people have had a double whammy because not only have interest rates added $6000 a year to typical repayments, the cost of living is soaring, with electricity prices up nearly 40 per cent in three years, water up 27 per cent and rates up 15 per cent."
Steve Keen, professor of economics at the University of Western Sydney, says the numbers were shocking.
"It is a huge proportion of people looking to sell - that simply doesn't happen in a normal market," he said.
- NICK GARDNER
- From: The Sunday Telegraph
- February 20, 2011 12:00AM
TEN per cent of first-home owners who bought their property in the past two years have now either sold their homes, or are considering selling, because the financial stress has become too great.
A survey of homeowners has confirmed rising interest rates and utility bills have squeezed household budgets to breaking point.
The Mortgage Choice survey of 1000 first-home buyers found 10 per cent were selling up and 6 per cent said they would sell if mortgage rates increased by up to 1 per cent from current levels.
Another 14 per cent said they would sell if rates rose by 1.50 per cent.
The findings bear out the concerns of critics of the First Home Owner Grants, who claim thousands of buyers - persuaded to stretch to buy a property at a time of record low interest rates - would struggle to maintain their repayments once interest rates returned to normal.
Now, with mortgage rates at their long-term average and heading higher, the cracks in the Government's big stimulus strategy are beginning to show.
Federal Opposition finance spokesman Andrew Robb said young homeowners had been betrayed by the Government.
"They got totally suckered," he said.
"The Government propped up the market by luring in young people but there were no warnings about what might happen within a year or two - with interest rates in particular.
"Now young people have had a double whammy because not only have interest rates added $6000 a year to typical repayments, the cost of living is soaring, with electricity prices up nearly 40 per cent in three years, water up 27 per cent and rates up 15 per cent."
Steve Keen, professor of economics at the University of Western Sydney, says the numbers were shocking.
"It is a huge proportion of people looking to sell - that simply doesn't happen in a normal market," he said.
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