Everyday Money

I don't seem to be able to leave housing (as a topic) alone. This time it is good news for first home buyers. A recent Westpac report predicts flat prices for around 5 years. (This news is not so good for second home investors).

The number of house sales has declined by a third back to 2003 levels - an early warning sign. Westpac claims that monthly house price inflation has screeched to a halt. Rental yields are currently at around 4% and mortgages 9% plus, make the residential rental market very unattractive indeed.

The report suggests that housing affordability (defined as 25% of disposable income servicing an 80% mortgage) will eventually swing back in favour of home buyers but no t for about eight years as incomes catch up and prices stagnate.