Interest rates
Ukrainian homeland. The gypsy dance melodies woven through 'Scenes de la Csrada' inspired a virtuosic violin part.
The concert was of the highest quality by musicians of international standing. Australia is fortunate that such artists choose to settle here and so enrich our culture. Doubtless Oksana and Markiyan Melinychenko, and many other Ukrainian emigrants, will now be feeling great anguish for their homeland and those they left behind.
We here, far from the fray, can but hope that acts of support such as offered by our Rotarians bring some comfort to those thus affected by the traumatic events in Ukraine.
John Hart, Warragul
What is your house worth? How much of it do you actually own? These are two important questions that families will need to face as inflation and interest rates grow. In Warragul, the median house price is currently $630,000. Five years ago, it was $340,000.
Such growth is not sustainable. However, people have been convinced that investing in a house is as "safe as houses". Many people will be caught short with even a .25 of 1 per cent interest rate rise, because they have been encouraged to borrow as much as they can. Most are on variable interest rates which means that banks can increase their rates as they deem necessary. Variable interest gives the illusion that you can borrow more.
Government policies including the first home owners' scheme, continuing negative gearing, and reducing the amount of a deposit required have pushed housing prices up substantially and have priced many first home owners out of the market. There will be a reckoning soon if interest rates and inflation increase. Many more homes will come on to the market as people can't meet their mortgage payments.
Wages have not kept pace with the cost of living and something has to give, unless policies promoting wage suppression and the casualisation of work change. People forced out of their homes will not be able to quickly jump back into the rental market. Investors cannot afford to charge cheaper rents because they are also paying off mortgages. The median rent in Warragul was $255 per week in 2017 and is now at $420 per week. It may go higher if there is a glut of people wanting to rent.
Action needs to be taken to slowly deflate this housing bubble. That house of 2017 worth $340,000 has only risen in nominal value to $630,000 as the rollercoaster ride of the market, aided by the government's policies, has possibly reached somewhere near its peak. The house itself, hasn't changed. It is the perception of its value that has changed. Unfortunately, those who buy in near the peak may not enjoy the sudden dip that is about to befall them.
Swapping to fixed interest rates may be all that people can do, but they can't afford to leave it too long. It is important to monitor expenditure and to seek advice. During an election period, promises and predictions are made, but caution needs to be taken. If you are finding it difficult now, the “she'll be right" approach we are being told, may not be advice that in the long term worth taking. You may end up paying a mortgage on an asset that suddenly drops in value. Banks will not lose out in this. They will sell off an asset to recoup the money you have borrowed; an asset that you may still be paying for after it is sold.
It should never come down to making a choice between providing a roof over our head or food on the table. Politicians need to be informed of the difficulties that people are, and soon will be facing. The latest inflation figures should not easily be dismissed by politicians. With 65 per cent of Australians owning their own homes and more than half of these having a mortgage, there are a significant number of people who are or will undergo mortgage stress and a lot of others finding out that they will undergo rental stress. There are no short-term answers to the issues to do with housing, however an election period is a good time to raise housing affordability and cost of living with candidates. I wonder what they will say.
Greg Tuck, Warragul