It's not just Interest Rates that are to blame,
And from the 30 Year average of around 6.8% they are not really that high.
The problem is that Interest rates were too low,
And House Prices are too high.
When Interest rates were left too low for too long,
People borrowed more,
So Overpaid for Housing.
The Banks were happy to Value them at these high levels,
As well as approve the Loans,
Apparently the customers could afford the rate increases,
So they may have to take some of the blame....
Also many other factors have pushed up house Prices over the decades,
From 3x wages in the "boomers" day,
To 12.5x wages or more Today.
All mainly benefiting one generation....
Some suggest this was done to buy the boomers vote,
Or that it is due to a conflict of interest with those making the decisions,
All wanting their own Real Estate Portfolios to go up,
Possibly a combination of the two.
Anyhow Australia now has some of the Most Un-Affordable House Prices in the entire World.
Policies such as:
Mass Migration
Foreign Investment
Negative Gearing &
CGT Discounts
Have all been part of the problem that has caused this to happen.
Many Countries have had to ban Foreign Investment,
As their own people could no longer afford to buy a House,
And were priced out of the Market.
Anyhow something has to happen to fix it,
Eventually....
