Low interest rates and government grants have led to inflated housing prices according to Adrian Raftery, CEO of accountantsRus.
Raftery says that activities over the last few months have led to unhealthy, yet familiar symptoms as property prices rise as prospective first home owners rush to get the First Home Owners Grant before 30 June.
“There is no doubt that there is momentum building in the housing market for properties under $500,000.”
But Raftery says that this momentum is being driven by the property industry who are keen to drive activity, and first home owners with little or no investment experience.
“Of course a property agent is going to say now is a good time to buy. Don’t get caught out until you have done your own due diligence and can afford to meet commitments ,” warned Raftery, a Certified Financial Planner and Chartered Accountant.
He believes that the First Home Owners Grant is merely inflating the property prices being paid by the size of the grant.
Instead, Raftery feels that the First Home Owners Saving Scheme is a better government initiative as it encourages youngsters to save first before making large financial commitments. He also suggests that it should be mandatory for potential buyers to have a 20 percent deposit to reduce loan defaults, as well as avoid mortgage insurance, in the future.
“The latest national credit card debt figures ($45 billion) shows that we are a nation of bad savers. We need to change the mindset.”
“I would rather miss out on $24,000 from the Government than to lose fifty or a hundred grand down the track,” said Raftery.
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