Despite GDP figures released last week showing Australia is in recession and with unemployment rising, NSW Housing Minister David Borger, says it’s never a better time to load up with debt. “I strongly encourage anyone thinking about buying a new home to do so now – with lowering interest rates, a flat market and help from the state and federal Labor governments, Sydney is definitely a buyers’ market.”
Today’s comments come after the release of a NSW Government report on quarterly sales and rents showing that rents are rising while house prices are falling.
Mr Borger said “Our figures show that the sales price of homes in Sydney during 2008 dropped 8.1 per cent for homes and 5.6 per cent for units.”. With the medium house price in Sydney peaking around $575,000, a 8.1% fall or a “flat market” in his words, corresponds with approximately a $45,000 fall in value. As Australia enters a recession, there is no guarantee these falls will slow or reverse in the short term (3 to 5 years) meaning new home owners entering the market on Mr Borger’s advice could be losing $45,000 a year or $865 per week while having to make mortgage repayments. That’s a lot of money that could be used to pay rent.
Only on Wednesday this week, Mr Borger was telling News Limited that the number of homeless families in NSW had increased 51 per cent and that staff were finding shelter for an extra 643 people a month. “We are seeing people who are economic victims who have lost jobs and can no longer pay bills. They have racked up their credit cards,” he said. “There is a new category of economic refugee.”
Lets just hope Mr Borger’s comments today strongly encouraging new buyers into the housing market doesn’t end with a new set of economic refugee’s as job losses and negative equity starts to settle in.