NSW Housing Minister David Borger strongly encourages buyers to get into debt

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.

» Cheaper to buy than rent – The Sydney Morning Herald, 8th March 2009.
» Families lose their jobs and homes – News Limited, 4th March 2009.


  1. Buying a home is a big call and no matter when you do it, it will be fraught with some degree of fear and trepidation – “Is this the right place, is this the right time, what if I lose my job?” These are all good questions and will be relevant for first home buyers regardless of the state of the economy. But consider this: $400/week will rent you a very nice house in Western Sydney. If you lose your job and can’t afford the rent you’ll no doubt leave and find somewhere cheaper or live with family – nothing lost, just another economic refugee!

    But right now you can buy a brand new house in Western Sydney for $400,000. That same house would have set you back $500,000 18 months ago. At the moment, the state and federal governments will put $24,000 towards your purchase. Let’s assume you have $25,000 of your own money as a deposit and your mortgage is $350,000. Right now you can get a loan (from Aussiemac) at 3.99% – the result is your weekly repayments are $268/week (interest only). That’s a saving of $132/week. If you keep paying your same rent at $400/week towards your mortgage it’s no longer dead money paying off your landlord’s mortgage – you are paying off your own home.

    If you lose your job in these precarious economic times – you can still move out and move in with relatives and get a tenant in at $400/week to pay your house off for you! Either way, you’re better off in scenario 2.

    I agree with Mr Borger – there’s never been a better time – those people who listen to their fear and stay renting, waiting for the evasive “bottom” of the property market will be the same people who are crying foul in 3 years time that housing is unaffordable! There’s no time like the present.


  2. The housing minister would like to see more transactions so that his government collects more stamp duty. It is his job to achieve this.
    Due to this obvious bias it is not appropriate that he should be advising potential home buyers. For many, buying now would be a reckless decision.

  3. “Right now you can get a loan (from Aussiemac) at 3.99% – the result is your weekly repayments are $268/week (interest only). That

  4. Personally, governments should stay out of giving financial advice. Just as Obama recently mentioned “buying stocks now is a good deal”, housing ministers shouldn’t even be advising their constituents on what to do. Apparently it’s ALWAYS a great time to buy if you’re a real estate agent or in politics. Unfortunately, both have vested interests in propping up the housing market.

  5. Are you experiencing mortgage difficulties?
    We want to hear your story!
    The Urban Research Centre, UWS is recruiting participants for a study about mortgage distress from the perspective of the borrower.
    We invite you to complete our online survey at: http://www.uws.edu.au/mortgagesurvey

    You can also email us if you are interested in participating of a face to face interview (your time will be compensated with a grocery voucher valued at $50)
    Email: mortgage@uws.edu.au
    Phone number: 02 8833 5901

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