As we start the new year in Australia, we find ourselves in a unique situation. Home prices in this sunburnt country led the world market in terms of prince increases, with gains of 9.4 percent year-on-year for the September quarter. Following this country I call home, was France with (6.8 percent), and then Sweden (5.6 percent).
But the 9.4 per cent increase in Australian prices did represent a slowdown from the 15.9 per cent year-on-year rise posted in the first quarter of 2010, with successive rate rises and the expiry of the enhanced First Home Owners Grant in January starting to bite.
Of course, like anything else reported by Australia’s government, the excitement will likely be short lived, as the Reserve Bank will likely start tightening down on the economy so as to not let it spiral “out of control”. The Reserve Bank’s job is to keep inflation in check, which isn’t really the issue for me. I can understand that – it’s the banks independently raising rates above those of the Reserve Bank, with Commonwealth Bank and Westpac as the worst offenders.
Last month a RP Data-Rismark survey found Australia’s national city (median) dwelling price was $460,000, and $410,000 for all regions. It said the November rate rise, the banks’ interest rate top-ups, declining clearance rates and a rising stock of unsold homes hinted at tougher times ahead.
When we seeked out funding for our mortgage, we approached Mortgage House, and was met with some of the best advice I’ve received yet.
“Don’t worry about the rate increases. Create your own fixed rate, and budget against that. Make it high enough so subsequent rate increases won’t impact your pre-existing budget. If your current interest is lower than your fixed rate, put that money away for a rainy day, so you’re always prepared.”
It’s not a bad idea.. Things nowadays seems so…turbulent.