Are you expecting rising interest rates to affect building activity? Are you pausing or cancelling projects as a result? Or are you keeping calm and carrying on with projects, and how come? Tell us your story
I agree. Bring it on. Finally it might be worth having a term deposit for savings. I can’t believe people are in so much ‘shock’ at getting a rate rise. Did people not think there would be one????
Hopefully my savings will have a higher interest rate, and I can have some extra funds to start a project. There are always different sides to one RBA interest rate rise.......in 12 years!
Does grey make you feel grey?
Ideas for eco friendly, beautiful cottage for rural Sydney
Where do we start with house renovation?
Advice for my new project!
We are caught in the middle. Rising building costs on new home & expect lower sale price (or at least slower sale) on current house by end of the year
My daughter has stopped & is no longer going to build because of the extraordinarily high cost of doing a building in Aus!
Interest rates for mortgages are not the reason for the high cost of homes. It is a supply and demand issue. The demand is higher than the supply. Carpenters, brick layers are all in high demand, therefore are paid more to get the job done. Price of iron ore has increased earlier in 2021 therefore the cost for steel has increased. Etc etc. the pandemic slowed the production of goods, in overseas factories, that are required to build our Australian homes. Therefore companies were paying more to get the goods produced. Shipping costs has also increased to import goods, plus time delays through the ports. The government gave out incentives for people to build homes, this coincided with the COVID pandemic where housing was sort after, therefore producing a build frenzy.
the reason why people are re thinking their future build, is NOTHING to do with interest rates.
Dreamer & Bargainhunter I am a retiree & in same position ashigher interest rates means an income stream BUT this a building discussion group & the question was how is the current market affecting projects!
Yes totally agree, that is why in my first comment, I have said I may have extra funds to start a project.
Funnily enough , I thought about outlining the situation here in NZ a couple of months ago ( when I tendered on the rural property and lost it by apparently well over $1 million ! ) , but I wasn't sure if Houzz allowed for financial discussion . Seeing as they have started this thread , I assume they do haha .
So here in NZ , prices for anything imported has increased -- freight prices have more than doubled in a lot of cases , costs to buy have increased , but also 'lead times' have increased . I'm an importer ( not in the housing materials market ) and we try to have 2 months supply here in NZ , but as it now takes 3 , 4 sometimes even 5 months to get goods that used to take 6-8 weeks , we can have $1 million of product here , another $1.5 million on the water / still in country of origin / sitting on wharves / waiting for Customs . It all has to be paid in advance .
So then the money costs more too .
BUT in NZ , we had another huge curve ball -- on 1 Dec 2021 , the Govt bought in a law that said lenders who lent 'recklessly' could be fined up to $200,000 per contract , and the contracts could be unenforceable . And there was no definition of reckless lending in that law .
So is lending $2 million to a newly married couple on a combined $150k a year , who have saved $100k and parents will guarantee $300k more , reckless ? What if he loses his job , what if she gets pregnant ? What if house prices drop ? The irony is that it made lenders extremely nervous , almost no-one could borrow , and house prices have dropped , apparently 8% or more in the last 6 months , whilst housing interest rates have gone from around 3% to around 6% .
Now scale that down -- there are 'payday' lenders that lend you $500 for a week , so you can pay your power bill or rent or car repairs , and you pay them back $550 or whatever . These are the 'legitimate' ones , then there are the backstreet 'knee capping' ones who will charge $100 a week for life , but likewise the irony is they are unlikely to be caught ( no paperwork would ever be discovered at a guess ) .
Then you have someone like my Dad -- he's done 30 or 40 multi-unit developments over 30 or 40 years , sometimes 3 or 4 at once , he's probably owed $10's of millions at some stages . Reckless to lend to him ? Or do you say you've lent to him 10 times before and always gotten your money back , he has 20% or 50% equity , and other assets , so a pretty safe bet ?
So 6 months down the track , my understanding is that no-one has been fined , and things are moving from the 'panic' end of the scale to the middle 'sensible' area . But I'm no expert , definitely not on finance or real estate values , just my observations .
Without getting too political , it seems fairly typical of politicians and laws they make -- they think they are helping , but it seems to make things more difficult for people who were sticking to the rules and/or the intention , whilst those operating outside that either won't care , or would have quietly disappeared anyway .