Is it a case of now or never?

While the past year wasn’t as economically gloomy as predicted, many people have been surprised to learn that Australian home prices rose more than 13% during 2009. We also learned that over the past 10 years, house prices almost doubled in Sydney, and more than doubled in Brisbane and Melbourne. If this trend continues, all three cities will have median house prices of over $1 million by 2020.

Stop and think about that for a moment. To buy an ordinary house in Australia in 10 years time, you’ll have to be a millionaire. Or prove that you can earn a million dollars. That’s scary for anybody who is thinking about buying a house in the coming years. On the flip side, people who are already in the housing market will see substantial gains on their investment.

So what’s causing house prices  to rise so sharply?
There are a number of factors that have worked together to push the cost of housing up. Australia’s robust economy and strong population growth mean there is strong demand from people who want to buy property. However, Australia only has a small number of available houses. Also, relatively low interest rates and government grants for first home buyers have also played a part.

More rate rises?
On March 2nd, the Reserve Bank of Australia lifted its key interest rate by 25 basis points to 4.00%, adding $50 to the average Australian monthly mortgage repayment. While this is the first rate rise for the year, it comes on top of three consecutive months of interest rate rises in late 2009.

As the economic situation in Australia continues to stabilise and improve, many experts are tipping the official cash rate to reach 4.75% by the end of 2010. That’s an extra $150 on the average mortgage and could make it tough for the estimated 250,000 firsthome owners who entered the market in the past 18 months.

Why you’re better off getting your home loan with First Option
Whenever you do decide to buy, we are here to help. Our website has calculators to help you estimate just how much you can borrow and what your repayments might be. And our team have a wealth of experience in helping Members find the best  home loan.

Most importantly, our home loan products come with competitive interest rates and no application or monthly fees.

It’s most likely that over the next 10 years, buying a house will become increasingly more expensive. So, if you’re thinking of getting into the housing market, it may be better to do so sooner rather than later.