Inflation hitting the back pocket
Recent figures released by the Reserve Bank of Australia (RBA) show that property owners are hurting because of inflationary conditions in the economy. The rising cost of living is causing households to suffer as any increases in salary or wages are being gobbled up.
ABS figures show the cost of living rose 4.5% last financial year boosted by record petrol prices, the biggest rental increases since 1989, higher bank fees and margins, rising health premiums and the Federal Government’s increase in excise tax.
The affect this is having on the housing market is quite significant and reaching all stakeholders including property owners, property seekers and investors.
Property owners need to repay their home mortgages so these inflationary factors mean there is less money to pay the mortgage and may mean the property owner needs to sell their property.
Property seekers/renters who are trying to save a deposit to purchase a property will struggle to save money if the cost of everything around them is rising.
Property investors will have less money to invest in property because the cost of all other things around them is increasing, not to mention the downturn in the share market which is likely to reduced the amount of money they have for property investment.
A higher cost of living isn’t good for the economy and in particular the housing market. The Federal Government doesn’t know what to do, any economist out there?
Comments
The Federal Government won’t do anything but the RBA will as they decrease interest rates next month, lets just hope that the banks pass on the interest reductions.
T-Bone
28.08.08
2:20 pm
I hope this kick-starts the market and creates some interest from buyers.
JaneH
30.08.08
8:52 am
I am of the opinion this proposed interest rate reduction is too late. The property market has been sluggish for the past 18 months and consumer confidence has being reducing all year. You will start to see the unemployment rate increase over the coming months as many businesses begin to layoff staff and stop employing. Interest rates should not have increased earlier in the year.
Mark
31.08.08
3:24 pm
It is more of a state goven’t issue.
If state goven’ts oblished stamp duty and land tax investing in the property market would be more attractive. At the moment their is no encouragement for investment because of the high taxes which are applied. Investors are better buying shares, investing in hedge funds or property overseas.
State goven’ts are too greedy even when most of them and the fed goven’t are from the same party.
John Crabbie
01.09.08
11:35 am
State governments need to be careful if they were to consider abolishing stamp duty. Yes, this would increase investment in the property market but it will push the price of housing up to a level which is out of the reach of the normal person in Australia.
The good thing about the last housing boom is that wages were increasing at the same time. But if we have a situation where wages are decreasing but there is a flush of investment in the property market, it isn’t a good situation for home buyers
T-Bone
01.09.08
4:11 pm
For those that didn’t see interest rates were reduced last night!
Rodney Munch
03.09.08
6:21 am