dogma79I don't disagree with your comments to the effect...

dogma79

I don't disagree with your comments to the effect that:


>>>>>If you remove first home buyers from a market, you set off a chain reaction that gradually works its way through the rest of the market. The perfect example of this is Perth right now.<<<

however your conclusion is fundamentally wrong to the extent that you have asserted

>>>>>>IMO, the section of the market that is really hurting at the moment is the real blue chip areas...Peppie Grove, Cott, whatever. It's simplistic to say that's because of affordability issues, but it illustrates my point.<<<<

I am aware of loan defaults in Eastern suburbs of Western Australia and on a mortgagee belt far south and Northern parts of Perth Metro area but I am yet so see any evidence of bank foreclosures in suburbs such as peppermint Grove - Dalkeith, South Perth, Applecross, Claremont, Cottesloe at all.

these areas are occupied by more affluent professionals / businesspeople with high disposable income who probably had the business sense of even fixing their mortgage rates as far back as three years ago.

I hear in Armadale in Western Australia 1 out of every four properties are in the market.

the real estate market is facing a slowdown as a direct result of a high interest rates which highlights my point; that high interest rates is no solution for 1st home buyers- even a blind Freddy can tell you that now. that's why people in the mortgagee belt (nationally) are hurting and sometimes even lose their homes.

typically these are the same people who at the lower interest rates got into the market and thought they could afford the repayments.

they bought with low doc loans and no doc loans and often didn't even fix their interest rates and now paying anywhere from 9.8%-13% in interest rates and facing bankruptcy or losing their homes.

who do you think would be buying those properties that are now being sold or Auctioned by banks "mortgagee sales" "foreclosure sales" and so on?? more than likely the guy who lives in Peppermint Grove and Dalkeith.

I tell you who wont be buying now. (the first home buyers)

very often people draw the wrong conclusions from known facts.

ie dogma79's father had moustache (fact)

a man that I saw on the Bus had a moustache (fact)

therefore the man that I saw on the bus is dogma79's father (the wrong conclusion)

in essence we may need 2-3 years to recover from this downturn but with higher interest rates this could take a decade to fix.


there are more bad news for the first home buyers

developers usually built for a market and when there is no market it is less likely that the developers take the risk.

the real issue is therefore the affordability factor and interest rates has an enormous effect on the question of affordability.