Ok......Try to understand this, its pretty simple.
there are many factors that drive higher house prices but you need to work out who the winners are and the agenda they have.
Governments need the prices to be high because the taxes and charges levied on housing is a percentage of the price or value.
Whether it be rates, taxes, stamp duties, etc, ALL are based on the price of the property. The higher the price - the more revenue.
2: Banks - their "cut" is a percentage of the purchase price The higher the price, the more they make over the term of the loan.
They have always pushed borrowers into a particular loan, because if the borrower defaults, they get the house.
I have written thousands of loans for borrowers, and only a handful have asked, can I get a better rate than that, 90% are more worried about just being approved.....tells u something doesn't it.
So maybe the borrowers out there are also to blame.
Banks are there to push out loans, they have a certain quota that needs to be met each month, banks need to keep lending money to make money.
The Real Estate Industry commission is based on a percentage of the purchase/sale price, or a percentage of the rent.
Real Estate Agents "talk the market up" in the pursuit of a higher commission. This raises the expectation of a higher return for the vendor.
Although the real estate agents commission difference is negligible, it still hits the pocket.
The solution?
Government taxes and charges should be based on the COST of supplying and servicing that property.
Lending institutions... There must be harder nosed code of ethics toward borrowers, and by new regulation.
Loans must not be for more than 80% of the value of the property imo.
Although mortgage insurers wouldnt like to hear that, most people actually think the mortgage insurance covers them as a borrower should they default, it just covers the banks exposure and risk....thats all.
Also, the interest rate on that loan should be fixed at the rate it is when the loan is approved.
The commision Real Estate Agents get should be a flat dollar amount.
This will encourage Real Estate Agents to switch from price selling to volume selling.
Instead of talking the market up to get a higher price, they will either be honest when suggesting a price for the vendor, or even talk it down, in order to get a quick sale so they can focus on the next sale.
A side benefit would be a higher turnover of properties, lower expectations of price by the vendor and so, properties selling quicker.
Even us finance brokers should get a set fee for any loan imo, then customers know they will get placed in th correct product without it being commission based.
There are many other factors, but greed is the main driver, and we wont see lower prices or more affordable housing while ever the only players in the market are fixated with higher prices.
And it will never change.......so don't fight it....join it.
