Survey reveals 63% believe higher rates will force home sellers to accept lower prices.
(PRWEB) September 22, 2006 -- According to a survey by NEWS.com.au, higher interest rates are forcing many to reduce selling prices, while many report their mortgage is worth more than their property.
Conducted by CoreData in partnership with NEWS.com.au, the survey of 2065 respondents found:
- 63 per cent of respondents expected interest rate rises would force property sellers to accept lower prices.
- Almost one-third of respondents said the value of their home had fallen in the past twelve months.
- Of those people who had seen the value of their property fall, one-quarter of this group indicated that their mortgage was now worth more than their home -- or that they held “negative equity.”
- 48 per cent expected house prices to fall further in coming months, up from the 42 per cent in a June survey and 33 per cent in a February survey.
- Nearly 70 per cent of respondents earning less than $50,000 per annum said that the two recent interest rate rises in August and May had made paying their mortgages more difficult.
- 31 per cent said a 1 per cent rise in interest rates would force them to sell properties.
- 65 per cent thought the recent rises in interest rates and petrol prices had wiped out the benefit of the tax cuts which came into effect on July 1.
The central bank in August lifted the official cash rate by 25 basis points to 6.0 per cent, a five-year high, following a rate rise in May. The rate rise took variable lending rates to 7.8 per cent, well above lending rates of recent years.
Around one-fifth of borrowers claimed that a 0.5 per cent increase in interest rates would significantly impede their ability to meet mortgage repayments. This figure rose to 36 per cent if interest rates were to rise by another 1 per cent from the current position.
That response jumped to nearly 80 per cent of people when they earned less than $75,000 per annum.
According to Nicki Bourlioufas, business editor of NEWS.com.au, the survey shows Australians are expecting their property value to fall and are feeling the impacts of the recent interest rate rises.
“For many Australians, the bad news has already hit – almost one-third of respondents said the value of their home had fallen in the past twelve months.”
“Many also said the recent rises in interest rates and higher petrol prices had wiped out the benefit of the July tax cuts. “
“The higher interest rates are hurting many, but for those who are still keen to enter the property market there is opportunity to seal lower prices,” Ms Bourlioufas said.
To see the NEWS.com.au story on the survey results visit:
NEWS.com.au Australian property price fall interest rate survey.
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