| Home | Register | Members List | Blogs | Search |
 |
| Thread Tools | Display Modes |
 |
Interest rates are on the way down.
My question is, how low will they go and how long will they stay low? ...and what impact will this have on property prices?  |
|
||
|
Moderator
|
There is much talk about interest rates going as low as 2-3% here in Aus and even lower to 0% in other countries especially in Europe. I feel that 2-3% is fair but here is my question; at what long term cost will this be?
I realise that the idea is to stimulate business growth and capital expenditure and obviously create or maintain jobs within the economy or are we just going to see a continuation of the current debt bubble that has not been let to fully 'pop.' Interest rates, I feel, may hit the low point by the end of next year and probably stay that way for maybe 12 - 18 months before slowly heading back up and stabilising around 4-5% by about 2012. I have no basis or theory to base this upon; it’s just a gut feel. I feel the current interest rate cut is not going to teach people the lessons of the current debt bubble and they are going to continue buying their plasma screens and Toorak tractors for their McMansions on an extended mortgage, thus continuing the crisis we are in. The only good thing is that no deposit home loans should be out the door by then so the people who shouldn’t have been able to afford it this time around wont be able to next time. As for house prices in all of this, I am still seeing signs of prices coming down a little in my area (SE Melbourne) in the $500k to $1Mil category as well as the high $400's coming down to low $400's. Over time I feel this may settle a bit and maintain a norm about 7-10% below what we are seeing now. This may only last for a year or 2 at the max until normal capital growth will surpass the deflation in prices. I only hope that people this time around aren’t suckered in by real estate agents and buying into houses just for prestige instead of buying a home for their family. (i.e. they are not buying above their range)  blue |
|
|||
|
|
Quote:
Good to see your post - must be the same nick! You correctly predicted rate drops I recall and I remember getting on my soapbox in Sept stating that the .25% drop was meaningless and we would have the RBA chasing rates down quicksmart and it has happened despite the analysts and economists saying otherwise. I really do believe you will be able to take your time in fixing between the 2-3% range and that they will not be able to hurry on rate rises until such time as the economy fires. All the signs are highly favourable for Vic and to some extent NSW. WA is not nearly the basket case many portray / has slowed but is still historically high and only the foolhardy are paying. Its all changing in our favour again and whilst these are unique times I have never seen so much being thrown at so much by so many that when traction occurs in the world economies those of us with tangible assets will be the beneficiaries. Cheers |
|
|||
|
Quote:
I stopped listening to "Australia" years ago and focused on what was happening locally. What alot of the bears forget (particularly in discussions on ASF) is that the housing market is driven by the common person, not the astute investors that they think everyone is. The common person will see the interest rates come down and realise they can achieve the "great aussie dream" of owning a home and will start buying. Driven purely by emotion and not taking too much notice of the economy. |
|
||||
|
| Thread Tools | |
| Display Modes | |
|
|
| Register | FAQ | Members List | Calendar | Search | Today's Posts | Mark Forums Read |
Linear Mode
