THE common sales pitch in the new house and land market is: “There has never been a better time to buy.’’
Well, there may be some currency in that saying, according to a leading economist. Housing Industry Association chief economist Harley Dale says the current very low home loan interest rates should stay on hold for some time yet but eventually must rise.
“We believe that this borrowing cost environment will last through the rest of 2014 before a likely increase in interest rates in 2015,’’ he says.
“Now is a great time to buy from a cost of borrowing perspective. If you are in a financial position to take an educated decision to engage in the new housing market then variable mortgage rates are pretty much the best now that you will ever see.’’
The HIA spokesman says the added good news for homebuyers is that new homes in Melbourne are cheaper than established dwellings. And, according to the HIA affordability index, new houses in Melbourne are more affordable than those in Australia’s biggest city, Sydney.
Mr Dale says a mix of factors is keeping interest rates low and affordability high.
The economist explains that interest rates are being kept low to “support a broad’’ recovery given of the ‘’winding down’’ of the resources (mining) investment boom and a slow general economy.
Mr Dale believes there will be little movement on interest rates until the economy as a whole picks up.
“New home building is leading the recovery but until signs of a broader recovery emerge borrowing costs are likely to stay at their near current record lows,’’ he says.
By Andrew Brasier
Published in The Indian Weekly (First Weekly Indian news Magazine in Melbourne, Australia)