This is How a Heart Breaks
Dear Scott,
We can’t buy a home. My fiancé and I both earn good money. We have a healthy deposit and budget and want to buy so we can start a family. We’ve offered more than they were asking and been told no — the vendor took a cash offer instead. We told agents we are pre-approved first home-buyers, yet they just don’t call us back. I obsess over realestate.com, ringing as soon as something comes up, only to find it was sold while waiting to be uploaded to the site. The constant rejection hurts when it’s holding us up from doing what we so desperately want to do — have a baby. Will it end? My heart breaks for anybody earning the average wage or below it. The dream of owning your own home must be feeling like a heart crushing unlikelihood.
Just another beaten-down first homebuyer
Hi-ya
I have a few thoughts.
First, as a property investor myself, I get no joy from surging house prices, which have increased a staggering 21% over the past 12 months. This isn’t healthy for the stability of our country.
Second, I believe interest rates will rise, and when they do they’ll burst the housing market bubble.
Let me be clear: I have no crystal ball, and picking short-term economic moves is a mug’s game — just ask the Reserve Bank, which has been consistently wrong on all manner of economic forecasts.
Yet it gets clearer when you zoom out:
In 1990 official interest rates were 17.5% … today they are 0.1%.
Question: where do you think they’ll go over the next five to ten years?
I asked my eight-year-old this question, and he said “Up!”
“After all, they can’t get that much lower, Dad.” (Get this kid a seat on the RBA board!)
So when interest rates rise — and they surely will — it’ll be brutal for many people who’ve borrowed too much. I can’t tell you when that will be … the only thing I can say with great certainty is that you don’t want to be up to your eyeballs in debt when they do.
Finally, who says you need to own a home to have a baby?
Be a smart, savvy, cashed-up renter … rather than a postcode povvo.
Scott.