The Reserve Bank of Australia has expressed concern over the increasing level of household debt relative to income. The bank says that Australians should be aware that wages are behind increasing costs and gave a reminder that interest rates will inevitably rise. Although in the most expensive areas the ‘expected repayment burden’ is roughly at the 10-year average, the low interest rates are not typical over that period. The warning highlights the importance of adding in some ‘wriggle room’ when calculating home loan repayments. The RBA pointed to NSW and Victoria as the areas where the payments to service mortgage debt is close to historical highs, due to the fast growth of house prices in those states.
Perth house prices could fall in 2015 says real estate association
House prices in WA could fall in 2015, especially in Perth’s prestige market. The Real Estate Institute of Western Australia says that as the number of available properties is increasing faster than sales. The high-end of the market is particularly vulnerable and properties above $1.5 million are already frequently being discounted. The downturn in mining in the area has meant that company-rentals for executives is declining and sales are falling, too. Discounts for prestige properties are typically between 5 and 7 per cent and homes are taking much longer to sell with around two months being the average.
Construction growth eases in October
The National Construction Industry expanded for a fifth consecutive month in October but its rate of growth eased from September’s record high, with the Australian Industry Group/Housing Industry Association Australian Performance of Construction Index falling 5.7 points to 53.4. The residential sector continues to show strength especially in apartments but commercial construction is growing at a slower rate. HIA Chief Economist Harley Dale said: “While the rate of expansion slowed in October 2014, this latest update is still a healthy one for Australia’s construction industry. It seems the case, however, that the activity and new orders indices for both detached houses and apartments are consistent with the maintenance of elevated levels of residential building approvals, rather than further growth.”
Property auctions busy at the weekend
Sydney property auctions had another busy weekend with the Domain Group reporting a clearance rate of 75.5 per cent from 942 auctions. The most expensive property sold came in at just under $5 million for a beachfront property in need of some modernisation. The Monash Crescent property attracted much interest especially as the last time it was for sale was 60 years ago.
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