And at the end of the street there is a house by the lake: Rising interest rates are jeopardizing some financing plans – even for real estate like here in Sydney.
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The Australian housing market shows what higher interest rates mean. In view of the enormous debt and flexible interest rates, bankers are already warning of a hurricane.
Stress best describes the situation of property owners in Australia. Some fear that, given rising interest rates and variable conditions, they will no longer be able to pay their mortgage. The others worry that they have gambled too long and are now selling their property for a lower price than they had hoped. The third play poker and bet on even lower prices before entering the market. Happy are only those who bought or inherited years ago, stay where they are – and get involved in the Australian winter in a rocking chair.
The overall situation is confusing
Fed governor Philip Lowe vowed stone and leg months ago that the key interest rate would be zero “at least until the end of 2024”. Then he, too, realized that the collapse of the supply chain was also affecting Australia, that the attack on Ukraine was shaking up the markets and that the Americans were turning interest rates faster. In the meantime, Lowe has set the Australian key interest rate at 0.85 percent, and by the end of the year it should be a good 2 percent.
