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Time to buy - if job is safe
Jessica Irvine Economics Writer
January 15, 2009
YOU can almost hear the sound of cheap champagne corks popping. A generation of would-be first-home buyers are getting ready to escape the clutches of the rental market.
First-home buyers have reappeared in their highest numbers since the boom of the early 2000s pushed them to the sideline to watch house prices and interest rates rise.
The rapidly deteriorating economic outlook is shifting the long-running debate about "rent versus buy" in favour of "buy".
Interest rates have already been slashed by 3 percentage points as the Reserve Bank embarks on its most aggressive rate cutting cycle in decades to stave off a domestic recession. More relief is on its way, with economists tipping rate cuts of about 1 percentage point this year, starting next month.
House prices have stagnated in most capital cities, and fallen in some parts of Sydney - though prices remain high relative to wages. Every month in which prices do not rise, but wages do, is a month in which affordability improves.
And other people's pain may also be first-home buyers' gain. If predictions of rising joblessness come true, some homeowners will struggle to meet repayments, leading to more forced sales at lower prices.
The rental market is set to remain an uncomfortable place to be. A year or two of double-digit rental increases have already stretched some renters to their limit. Ominously, yesterday's home loan figures show investors are taking out fewer loans, meaning the supply of investment properties for renters to live in is going to shrink.
The main question hanging over would-be new-home buyers is the state of the jobs market. Only those first-home buyers confident they can keep their jobs in 2009 should be celebrating.
Jessica Irvine Economics Writer
January 15, 2009
YOU can almost hear the sound of cheap champagne corks popping. A generation of would-be first-home buyers are getting ready to escape the clutches of the rental market.
First-home buyers have reappeared in their highest numbers since the boom of the early 2000s pushed them to the sideline to watch house prices and interest rates rise.
The rapidly deteriorating economic outlook is shifting the long-running debate about "rent versus buy" in favour of "buy".
Interest rates have already been slashed by 3 percentage points as the Reserve Bank embarks on its most aggressive rate cutting cycle in decades to stave off a domestic recession. More relief is on its way, with economists tipping rate cuts of about 1 percentage point this year, starting next month.
House prices have stagnated in most capital cities, and fallen in some parts of Sydney - though prices remain high relative to wages. Every month in which prices do not rise, but wages do, is a month in which affordability improves.
And other people's pain may also be first-home buyers' gain. If predictions of rising joblessness come true, some homeowners will struggle to meet repayments, leading to more forced sales at lower prices.
The rental market is set to remain an uncomfortable place to be. A year or two of double-digit rental increases have already stretched some renters to their limit. Ominously, yesterday's home loan figures show investors are taking out fewer loans, meaning the supply of investment properties for renters to live in is going to shrink.
The main question hanging over would-be new-home buyers is the state of the jobs market. Only those first-home buyers confident they can keep their jobs in 2009 should be celebrating.
