The latest from Integrity Finance Australia
Everyday our brain makes multiple decisions. These decisions compound to make us who we are, determining our fitness level, our health and our wealth.
We all know that one day of good decision-making in diet and fitness will not affect our overall health and well-being. It takes time, and commitment. The compound effect of good decisions made day after day is undeniable.
So it is with your financial decisions, which will determine your long term wealth.
Housing affordability is becoming an increasing concern for first home buyers and policy makers amid recent, rapid price increases in housing values. But the double-edged sword of reducing housing values to make them more affordable, is that housing also makes up the majority of Australian household wealth; make housing more affordable for one Australian, and we risk reducing the wealth for another.
Continuing to be a major story - Property owners are happy! House prices are booming. So much for ‘expert’ predictions of a 40% collapse!
Interest rates at 2% are a major driver. Despite low wages growth, housing interest payments have dropped from over 10% of income, to now only being 5% of income, the lowest since 2002. Affordability of repayments is no longer such a problem.
As the vaccine is rolled out and Australia recovers from the recession, 2021 has started out as the year of the home buyer. Have you re-assessed your position?
Ironically the Covid-19 lock down has increased savings levels across Australia. That has for many potential home buyers increased their available deposit.
Some media outlets screamed ‘it will cause another financial meltdown akin to the GFC’ following recent Federal Government announcements to curb responsible lending laws.
I have been asked by many clients for my thoughts on this, from my position as a professional accredited credit advisor acting in-between the bank and customer in support of the customer.
The truth is we need responsible lending rules and legislation. There are many vulnerable members of society who will take credit offered to them with insufficient consideration of the consequences, or of their ability to repay the debt.
But is the existing legislation pushing too far?
As the Victorian economy struggles through the Coronavirus shutdown, one question keeps coming up: Are property prices about to crash?
Of course there are always the doomsday headline seekers. Professor Steve Keen has been predicting a 40% fall in Australian house prices “within 5 years” since the GFC in 2008. He is infamous for having bet on it happening. Which he lost, subsequently walking from Canberra to the top of Mt Kosciuszko as his ‘punishment’.
In Victoria, these crazy times make us all feel like we are in a movie, perhaps a futurist dystopian drama, or perhaps a little like JAWS 2, with COVID-19 replacing the shark?
‘It seemed we had everything under control. For a time. But nature cannot so easily be controlled: Not only did the danger return, it is worse.’
As in that movie we see our leaders needing to walk the tightrope, in a balancing act between safety and the economy. Each decision made is critical.
