Mortgage Rates are too high and have to come down.
I have been saying that Mortgage rates are too high ever since the RBA raised its official cash rate in November 2010.But then again I have also been saying that land prices are way too high, and have been for ten years, and this is the main reason why established homes are higher than they should be. So to lower housing prices, I guess that the RBA's intention may have been to quell demand for new home construction loans.
Whatever their reasoning high mortgage rates have lowered home building starts dramatically through 2011.
Why has housing demand disappeared?
So what happened to the pent up housing demand? Its seems to have evaporated.
I recall experts saying that there was a housing shortfall of 200,000 dwellings. Well nobody is saying that anymore.
And as we build less homes, house prices are falling, and home sales taking longer?
2012 is shaping up to be a time when home buyers can get real value for money, and home sellers are going to have to lower their house price expectations, yet again.
The bottom line is that the best time to buy a home is when everybody else is try to sell a home.
Home buyers Tip
So if you are considering buying a home in 2012, then take your time, and wait for a bargain in house price, location and quality.
Also, only consider buying a home with a long term view of home ownership. Longer than 5 years.
Whilst history tells us that the long term trend in house prices is up, in this housing market there may be a protracted period of prices flat-lining or trending lower. Protect your investment by shopping hard and negotiating on price.
Author: Rick Adlam, Mr Mortgage
