Sunday, May 10, 2009
Don't meddle with markets!
Bloomberg: Australia May Face Debt Crisis From Grants to Young Home Buyers
Australian Prime Minister Kevin Rudd’s bid to ensure his housing market avoids the global property slump may push a generation of buyers into a debt crisis.
Grants of as much as A$21,000 ($16,142) to first-time buyers and the lowest interest rates in 49 years have emboldened more than 40,000 young Australians to take out home loans since October, stoking demand for properties that cost less than A$500,000.
These buyers may be vulnerable when interest rates begin rising, potentially triggering a jump in foreclosures that will drive down property prices, cut profits at banks and damp household spending, which accounts for half the economy.
Posted by tyrellcorporation @ 08:39 PM (470 views) Add Comment
3 Comments
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1. geed said...
Yup as short sighted as Howard from the Halifax ads. In effect rudd is artifiically inflating the values of houses via the Grant scheme (which ends June 30th) much in the way the cheap credit did. After that expect the values of all first timer properties to slump $21,000!
Just stoopid.
2. happy mondays said...
Sounds like a financial Gallipoli..
3. Beartil2010 said...
I live in Oz and this is making me sick. It's the only thing propping up the market, and all it's doing is ripping off all taxpayers to pay for it and sucking FHBs into debt! Argh!
It's 50:50 as to whether they'll cancel this grant on June 30. They may well not - as it is the only matchstick holding up the growing mountain of debt...