Rate rises looming as property market volatile – report

Rising Home Prices

Homebuyers are continuing to pay premium prices for property, despite the impending interest rate rise.

According to a recent report by mortgage insurer PMI Mortgage Insurance and BIS Shrapnel, housing prices have grown at a faster pace in Melbourne, Brisbane, Perth and Hobart in the June quarter of 2007 compared to the previous year.

The mains findings were:
* In Brisbane, property prices rose 12.4 per cent to $366,300;
* In Perth, property prices rose 11.6 per cent to $446,500;
* Prices increased by 11.9 per cent in Hobart to $310,00;
* Prices increased by 8 per cent in Adelaide to $310,000.
* In Canberra, prices rose 12.6 per cent to $428,000; in Darwin price was up to up 12.9 per cent to $395,000.
* The fastest rising prices were in Melbourne, which topped the list with a 13.2 per cent increase to $420,000;
* In Brisbane, property prices rose 12.4 per cent to $366,300;
* In Perth, property prices rose 11.6 per cent to $446,500;
* Prices increased by 11.9 per cent in Hobart to $310,00;
* Prices increased by 8 per cent in Adelaide to $310,000.
* In Canberra, prices rose 12.6 per cent to $428,000; in Darwin price was up to up 12.9 per cent to $395,000.

The only capital city to experience a decine was Sydney, where the median house price fell by 0.2 per cent to $525,500 in the period.

But according to BIS Shrapnel’s “Residential Prospects, 2007-2010” the rising interest rates point to a weakening in property prices, with the first signs appearing to emerge in Perth and Darwin.

According to BIS: “With speculation of further rises to rates in 2007, will this impact on residential markets, or will momentum in price growth overcome the hurdle of higher interest rates?”

Recommendations for Property Purchasers

In the period of increasing interest rises and property market uncertainty, it is of overriding concern to conduct your research thoroughly prior making an investment. A small oversight may cost you thousands of dollars in the long run. It is therefore very important to seek legal advice prior beginning your search.

Before you even begin to search for property, make sure you will be able to obtain financing. Speak to different banks, financial advisors and mortgage brokers and find a mortgage product that conforms to current market conditions.

Also before your property search you will also need the advice of an experienced property lawyer. Chose a solicitor specialising in commercial and residential property transactions. He will explain the purchasing process and your obligations as a purchaser under a contract for sale. A solicitor will also explain the necessary property inspections that must take place such as pest reports, surveys or strata inspections if your property is a unit or townhouse.

When searching for a property, do your homework. To make sure you are making a sound investment study the location, aspect, structure of your property and condition. You may also need to attend a number of auctions to be familiar with the bidding process. Seek legal advice on your obligations as a bidder.

Take your time, work within your budget and seek sound legal and financial advice; this way you can better equip yourself and your family to take on the current volatility in prices and rising interest rates.