The Australian housing market went into overdrive in 2015, and we saw housing prices rise dramatically. Sydney and Melbourne had the most noticeable increases, and it has left first-time home buyers wondering how they will ever get a foot on the property ladder.
Since the housing market spiralled out of control and house prices reached an all-time high you might be wondering why.
Many people believe that there are too many people and not enough houses, but this is not necessary the case.
Every time someone gets a mortgage the banks do not physically take money out of a vault and hand it over, the money is electronically created by the bank. As the amount of people applying for mortgages grew, the bank continues to create new money. This new money flooded into the housing market and pushed housing prices up.
As housing prices are pushed up, there is less disposable income in the market place and the economy suffers.
As the investment property market grows, and the economy suffers, it doesn’t just affect home owners, rents rise too so the home owners can afford these new higher mortgages. As their rents rise, how can people save for a deposit?
To try and slow the housing boom down, there have been stricter guidelines placed on lending, especially in the investment sector. This has obviously been working as we have seen a rise in owner-occupier mortgages in the third quarter of 2017. The ANZ alone has seen a 5.3% growth in owner occupier mortgages, which is a very positive statistic.
If you are looking to get your foot on the property ladder and you’re not sure where to start, why not talk to iCredit. If you’re looking for a home loan, iCredit is here to help, call 0421 258 548.